Welcome to class of International Human Resource Management by Dr. Satyendra Singh University of Winnipeg Canada

Learning Objectives  Creating a company “global mindset”  International HRM approaches  Recruitment selection and training  Expatriates  Compensation  Allowances  Bonus  Challenges Objectives:

The Global Mindset  Expatriate  A person living outside citizenship country  Global Mind-set  A mind-set that combines an openness to and an awareness of diversity across markets and cultures with a propensity and ability to synthesize across this diversity

International HRM Approaches…  Ethnocentric  Hiring and promoting employees on the basis of parent company’s home country frame of reference  Bias of the home country  Top executives get foreign experience  Polycentric  Hiring and promoting employees on the basis of specific local context of the subsidiary  Movement between home and host country uncommon  Must give locals to elevated position  revoke permit  Local supplier preferred  Managers unwilling to take promotion  Local managers may have their own agenda

International HRM Approaches  Regiocentric  Hiring and promoting employees on the basis of the specific regional context of the subsidiary  Hiring can be from both countries– home or host  Problem with third country employees  Geocentric  Hiring and promoting employees on the basis of ability and experience without considering race or citizenship  Best Practices

Recruitment, Selection and Training …  Parent Country National (PCNs) or Home Country National  Study of language and culture  Host Country National (HCN)  Hired in the host country  Third Country National

Recruitment, Selection and Training  Third Country National (TCN)  May accept lower wages and benefits than will employees from the home country  May also come from a culture similar to that of the host country  May have worked for another unit of the IC and be familiar with policies, procedures and people  Common approach in developing countries  May not be welcome by host country  May come from an international agency  Greater use as companies take geocentric view

Expatriates  Family  Nine of ten expatriate failures family-related  Unhappy spouses major reason for early return  Company losing a “million-dollar corporate-training investment” in executive

Language Training  Language Trap  International business person speaks only home language  English language has become lingua franca  Chinese new “hot” language to know

Expatriate Services… Health care programs to assist companies and expatriates with –Claims administration –Language –Translations –Currency conversions –Service standardization –

Expatriate Services  Banking services  Online, 24-hour assistance  Training  Culture and language  House hunting, utilities hook up, grocery and hardware shopping, long-distance care for relatives, schools, organizations, and cultural items

Compensation example

Compensation  Salaries  Paying home country nationals the same salaries as their domestic counterparts  permits worldwide consistency  bonuses  Increasing use of third country nationals- often treated like PCNs  Trend to pay HCNs same base

Allowances…  Housing Allowance  Permits executive to live at same standard as at home  Cost-of-Living Allowance  Based on differences in price of food, utilities, transportation, entertainment, clothing, personal services, and medical expenses as compared to home  Allowances for Tax Differentials  Ensures expatriates will not have less after-tax pay at home

Allowances  Education Allowances  Insures children receive education equal to that at home  Moving and Orientation Allowances  Household effects and language instruction

Bonuses  Expatriate employee compensation payments in addition to base salary and allowances because of hardship, inconvenience, or danger  Bonuses include  Overseas premiums  Contract termination payments  Home leave reimbursement

Compensation Packages  For expatriate employees, packages incorporate many types of payments or reimbursements and must take into consideration exchange rates and inflation

Compensation Packages Can Be Complicated  Allowances and percentage of base salary are usually paid in host country currency  Percentage usually 65 to 75 percent, with remainder banked where employee directs  What Exchange Rate?  Must be chosen  More difficult in countries with exchange controls and nonconvertible currencies

Compensation of Third Country Nationals  Trend toward applying the same compensation plan to third country nationals as home country expatriates  Problems can arise in  The calculation of income tax differential when American expatriate compared with expatriate from another country  Home leave bonus

International Status  Entitles expatriate employee to allowances and bonuses applicable to the place of residence and employment  Perks  Compensate executives while minimizing taxes  Private pension plan  Retirement payment  Life Insurance  Hidden slush funds (can be illegal)  Club membership  Company house  Foreign affiliate directorship