© 2010 by Prentice Hall 17-1 International HRM Challenge Chapter 17 Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall

© 2010 by Prentice Hall 17-2  Stages of International Involvement  Determining the Mix of Host Country and Expatriate Employees  Expatriate Assignments  Challenges  Enhancing the Effectiveness with HRM  Developing HRM Policies in Global Context  HRM and Exporting Firms Chapter 17 Overview Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall

© 2010 by Prentice Hall 17-3  Expatriate —citizen of one country  Lives and works in another country Stages of International Involvement   Multinational corporation (MNC)   Firm with assembly and production Facilities in several regions of the world   Transnational corporation   Firm with highly decentralized operations   In many countries   Has little allegiance to its country of origin   Weak ties to any given country Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall

© 2010 by Prentice Hall 17-4 Stages of International Involvement Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall

© 2010 by Prentice Hall 17-5  Outsourcing  Used extensively by firms in stages 3 to 5  Challenges include o Online security o Safety issues o Client complaints Stages of International Involvement   Falling Barriers   Trade, production, services, and finances barriers largely disappeared Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall

© 2010 by Prentice Hall 17-6  Wholly owned subsidiary and joint ventures  Must decide who will manage overseas unit  Three approaches  Ethnocentric approach  Polycentric approach  Geocentric approach The Mix of Host-Country and Expatriate Employees Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall

© 2010 by Prentice Hall 17-7 Reliance on expatriates increases when: The Mix of Host-Country and Expatriate Employees   Sufficient local talent is not available   Part of firm’s overall business strategy is to create a corporate-wide global vision   International units and domestic operations are highly interdependent   The political situation is unstable   Are significant cultural differences between the host and home countries Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall

© 2010 by Prentice Hall 17-8  20–40% failure rate for U.S. expatriates  3–4 times higher than Europeans or Asians Challenges of Expatriate Assignments   Many reasons assignments end in failure   Career blockage   Culture shock   Lack of predeparture cross-culture training   Overemphasis on technical qualifications   Getting rid of a troublesome employee   Family problems Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall

© 2010 by Prentice Hall 17-9  Difficulties on Return Challenges of Expatriate Assignments   Lack of respect of acquired skills   Loss of status   Poor planning for return position   Reverse culture shock Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall

© 2010 by Prentice Hall Selection  Emphasize cultural sensitivity as a selection criterion  Establish a selection board of expatriates  Require previous international experience  Consider hiring foreign-born employees who can serve as future expatriates  Screen candidates’ spouses and families  Develop an effective selection program for expatriates and the locals who help Using HRM to Effectively Manage Expatriates Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall

© 2010 by Prentice Hall Training  Should begin 9–12 months in advance of the assignment  At least some training should go to the expatriate’s family  Are three approaches to training:  Information-giving approach  Affective approach  Impression approach  Local managers need to be prepared to train incoming expatriates Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall

© 2010 by Prentice Hall Career Development  Position the international assignment as a step toward advancement within the firm  Provide support for expatriates  Provide career support for spouse Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall

© 2010 by Prentice Hall Compensation  Provide a disposable income equivalent to what the expatriate would receive at home  Provide an explicit “add-on” incentive for accepting an international posting  Don’t put expatriates in the same jobs held by locals or lower-ranking jobs  Calculating compensation for expatriates is very difficult  Fluctuating exchange rates  Cost of living varies tremendously Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall

© 2010 by Prentice Hall  Role of HR Department  Women and International Assignments Using HRM to Effectively Manage Expatriates Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall

© 2010 by Prentice Hall  Western-style management likely to clash with foreign norms and values  Must mold practices to culture Developing HRM Policies in a Global Context   Hofstede’s 5 Dimensions of Culture   Power distance   Individualism   Uncertainty avoidance   Masculinity/femininity   Long-term/short-term orientation Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall

© 2010 by Prentice Hall  EEO prohibition of discrimination based on age, sex, race, etc. apply to international assignments too  Foreign national employees of U.S. companies working outside the US are not covered by U.S. employment law  Immigration and Control Act (1986)  Non-U.S. citizens living and working in the U.S.  May not be discriminated against EEO in the International Context Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall

© 2010 by Prentice Hall  “National culture” may be an elusive concept  Culture changes over time  Companies sometimes blame international personnel problems on culture without study  Virtually no data on the success/failure of HRM practices as a function of culture  Different cultures often have very different notions of right and wrong  The business laws of other countries often force companies to change their practices Developing HRM Policies: Caveats Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall

© 2010 by Prentice Hall  Key impediments to exporting:  Lack of knowledge about international markets, business practices, and competition  Lack of management commitment to generating international sales  Impediments can be attributed to lack of utilization of human resources Human Resource Management and Exporting Firms Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall

© 2010 by Prentice Hall  Ethics and Social Responsibility  Many ethical dilemmas face expatriates  Ethical and legal are not the same Foreign Corrupt Practices Act (1977) Other International HR Considerations   Political Risk   Possibility that social or government pressures negatively impact operations   Expatriates often caught in middle o o Should understand political situation Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall

© 2010 by Prentice Hall  Are five stages of international involvement  Are three approaches to managing foreign ops  Ethnocentric, polycentric and geocentric  Emphasize cultural sensitivity when selecting people for international assignments  Position international assignments as step towards advancement in the firm  Don’t transfer home HRM practices abroad  Reinforce export activities with HR practices Summary and Conclusions Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall