Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Learning Outcomes Explain the political, economic, socio-cultural, and technological factors in different countries that HR managers need to consider Identify the types of organizational forms used for competing internationally Explain how domestic and international HRM differ. Discuss the recruitment, selection, training, compensation, and performance appraisal needs for different types of employees working across borders Explain how labor relations differ around the world 2

Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Factors to be Considered by HR Managers Political Economic Sociocultural Technological 3

Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Figure PEST Analysis 4

Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Analyzing Your International Operations 5 Domestic firm that uses its existing capabilities to move into overseas markets International corporation Firm with independent business units operating in multiple countries Multidomestic corporation (MDC) Firm that has integrated worldwide operations through a centralized home office Global corporation Firm that attempts to balance local responsiveness and global scale via a network of specialized operating units Transnational corporation

Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Figure Types of Organizations 6

Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Managing Your International Operations 7 Employees from the home country who are on international assignment Expatriates, or home-country nationals Employees who are natives of the host country Host-country nationals Employees who are natives of a country other than the home country or the host country Third-country nationals

Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Recruiting Internationally Core criteria that are viewed as essential in worldwide recruiting efforts Personal integrity Drive for results Respect for others Capability Virtually all countries have work permit or visa restrictions that apply to foreigners 8

Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Recruiting Internationally 9 Government document granting a foreign individual the right to seek employment Work permit, or visa Foreign workers invited to perform needed labor Guest workers Vocational training programs in skilled trades Apprenticeships Composed of members of multiple nationalities working on projects that span multiple countries Transnational teams

Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Selecting Employees Internationally Selecting employees in a foreign country environment can be difficult Get to know the local market and customs in hiring To understand local markets, HR managers can Get to know the universities, technical schools, and primary schools in the area Develop network in the business and government communities Understand the employees of the firm’s competitors 10

Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Selecting Global Managers Global manager: Manager equipped to run an international business Skills required for global managers Ability to seize strategic opportunities Ability to manage highly decentralized organizations Awareness of global issues Sensitivity to issues of diversity Competence in interpersonal relations Community-building skills 11

Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Selecting Global Managers Cultural environment: Communications, religion, values and ideologies, education, and social structure of a country Core skills: Skills considered critical to an employee’s success abroad Augmented skills: Skills helpful in facilitating the efforts of expatriate managers 12

Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Selecting Global Managers Steps involved in selecting individuals for an international assignment Begin with self-selection Create a candidate pool Assess candidates’ core skills Assess candidates’ augmented skills and attributes Companies that have selected the best candidates experience high expatriate failure rates Failure rate: Percentage of expatriates who do not perform satisfactorily 13

Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Training and Development When employees are sent aboard for an assignment, it is critical to provide them with training Companies have found that good training programs help them attract the employees they need from host countries 14

Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Compensation Different countries have different norms for employee compensation Financial incentives versus nonfinancial incentives Individual rewards versus collectivist concerns for internal equity and personal needs General rule Create a pay plan that supports the overall strategic intent of the organization 15

Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Compensation of Host-Country Employees Hourly wages can vary from country to country Paid on the basis of: Productivity Time spent on the job Combination of these factors Employee benefits can range from country to country 16

Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Compensation of Host-Country Managers Global compensation system Centralized pay system whereby host-country employees are offered a full range of: Training programs Benefits Pay comparable with a firm’s domestic employees Companies with centralized systems are having higher effectiveness and satisfaction levels with their compensation systems 17

Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Compensation of Expatriate Managers Effective international compensation program must be put into place Home-based pay Balance-sheet approach Split pay Host-based pay Localization Other issues 18

Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Performance Appraisal Appraisal of employee’s performance Home-country evaluations Host-country evaluations Home versus host-country evaluations Local managers with daily contact with the person are to have an accurate picture of his or her performance 19

Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Analyzing the International Labor Environment Factors of union strength Level of employee participation Per capita labor income Mobility between management and labor Homogeneity of labor (racial, religious, social class) Unemployment levels Companies are increasingly giving offshore jobs to countries where labor costs are lower, unionized workers have been forced to make concessions 20

Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Labor Participation in Management In European countries, provisions for employee representation are established by law Codetermination: Representation of labor on the board of directors of a company Power is with the shareholders who are assured the chairmanship 21