Human Resource Management in Global Markets

Why is expatriate management important? 1 out of 3 expatriates return early $55,000-$250,000 per failure $2 billion annually diminished self-esteem interrupted careers lost market share reductions in productivity

Issues of Human Resource Management Selection Training Compensation Adjustment Repatriation Process

1. Selection Parent Country Nationals Host Country Nationals Third Country Nationals

1. Selection (Cont.) Advantages of PCN Have technical expertise Familiar with corporate culture Access to performance information Loyalty Communication with headquarters Managerial development

1. Selection (Cont.) Disadvantages of PCN Expensive Face cultural learning curve Unfamiliar with foreign environment Government restrictions

1. Selection (Cont.) Advantages of HCN Familiar with local culture More adept at motivating workers Less expensive Good for public relations

1. Selection (Cont.) Disadvantages of HCN Difficult to assess abilities before hiring Not familiar with corporate culture May be difficult to fire or lay-off Communication with home office May lack certain technical skills Loyalty may be to country not to company

1. Selection (Cont.) Advantages of TCN Broad international experience Greater cultural empathy May adapt to new environment faster Cultural distance may be less Often less expensive than parent country nationals

1. Selection (Cont.) Disadvantages of TCN Host government perception Expensive May not have previous performance information May not be familiar with corporate culture Communication difficulties

1. Selection (Cont.) Selection Criteria Cultural empathy / relational skills Ability to adapt to new environments Independence and self-reliance Language training Adaptability of spouse and dependents Technical expertise Motivation for a foreign assignment

2. Training Cultural orientation Language training Business practices Social etiquette Political environment

3. Compensation Cultural Issues Differentials/COLA Taxation Foreign service premium/Incentives Assistance programs

3. Compensation Ranking list of motivators Motivator USA Germany Japan   3. Compensation Ranking list of motivators Motivator USA Germany Japan Money 2 1 5 Interesting and challenging job 3 Job security 4 Good match between job requirements and qualification Clearly defined tasks 8 Good personal atmosphere 7 6 Chance to acquire new skills 9 Chance to advance 10 11   (Mead, R. 2013:International Management. Oxford: Malden)    

Phases of Culture Shock 4. Adjustment Phases of Culture Shock The honeymoon Culture shock Adjustment Mastery

4. Adjustment Phases of Culture Shock Healthy Well-being Pathological Honeymoon Culture Shock Adjustment Mastery

4. Adjustment (Cont.) Factors influencing ease and speed of adjustment: Training Family Social Support Cultural Distance / Novelty Job Novelty

5. Repatriation Process Often overlooked by HR department and employees Reentry adjustment Financial adjustment Social changes

5. Repatriation Process (Cont.) Some numbers on returning expatriates: 10% are promoted upon return 80% feel experience is not valued 50% don’t like new job 18% leave within 18 months 40% leave within 3 years experience valued in labor market