1. CHAPTER 14: INTERNATIONAL/ GLOBAL HUMAN RESOURCE MANAGEMENT Copyright © 2005 South-Western. All rights reserved. footer

2. International Imperative Why organizations expand internationallyWhy organizations expand internationally –To capture enhanced market opportunities that foreign countries may present –To achieve economies of scale in production and administration by expanding scope and volume of operations to international markets –Keeping up with industry leaders may require organization to enter foreign markets –Acquiring ownership of foreign-based organization or subsidiary Why organizations expand internationallyWhy organizations expand internationally –To capture enhanced market opportunities that foreign countries may present –To achieve economies of scale in production and administration by expanding scope and volume of operations to international markets –Keeping up with industry leaders may require organization to enter foreign markets –Acquiring ownership of foreign-based organization or subsidiary

3. How International & Domestic HRM Differ International HRM requiresInternational HRM requires –Managing broader range of functional areas –Becoming more involved in employees’ personal lives –Setting up several different HRM systems for different geographic locations –Dealing with more complex external constituencies –Participating in international assignments that have heightened exposure to personal risk International HRM requiresInternational HRM requires –Managing broader range of functional areas –Becoming more involved in employees’ personal lives –Setting up several different HRM systems for different geographic locations –Dealing with more complex external constituencies –Participating in international assignments that have heightened exposure to personal risk

4. International Expansion Strategies for expanding internationallyStrategies for expanding internationally –Exporting locally produced goods to host country –Subcontracting or licensing production of certain goods or services to foreign partner –Entering into joint venture with foreign partner –Setting up operations (making a direct investment) in form of foreign branch or subsidiary Strategies for expanding internationallyStrategies for expanding internationally –Exporting locally produced goods to host country –Subcontracting or licensing production of certain goods or services to foreign partner –Entering into joint venture with foreign partner –Setting up operations (making a direct investment) in form of foreign branch or subsidiary

5. Assessing Culture: Hofstede’s Cultural Differences Dimensions Individualism or collectivismIndividualism or collectivism –Individualistic societies value development of, and focus on individual –Collective societies value group relationships Power distancePower distance –Extent to which society is hierarchical, and how power is distributed among its members Uncertainty avoidanceUncertainty avoidance –Extent to which society feels comfortable with ambiguity, and values and encourages risk-taking Quantity versus quality of life (masculinity/femininity)Quantity versus quality of life (masculinity/femininity) –Emphasis on assertiveness and achievement, as compared to interpersonal relationships Individualism or collectivismIndividualism or collectivism –Individualistic societies value development of, and focus on individual –Collective societies value group relationships Power distancePower distance –Extent to which society is hierarchical, and how power is distributed among its members Uncertainty avoidanceUncertainty avoidance –Extent to which society feels comfortable with ambiguity, and values and encourages risk-taking Quantity versus quality of life (masculinity/femininity)Quantity versus quality of life (masculinity/femininity) –Emphasis on assertiveness and achievement, as compared to interpersonal relationships

6. Exhibit 14-1 Assessing Culture

7. Hall’s Model of Cultural Differences TimeTime –Importance or sense of time in daily activities Space (distance)Space (distance) –Amount of physical distance individuals attempt to maintain between themselves & others Material goodsMaterial goods –Emphasis or inferences on possession of goods to signify power, success and status FriendshipsFriendships –Importance of friendships in conferring status AgreementsAgreements –Considers how agreements are reached TimeTime –Importance or sense of time in daily activities Space (distance)Space (distance) –Amount of physical distance individuals attempt to maintain between themselves & others Material goodsMaterial goods –Emphasis or inferences on possession of goods to signify power, success and status FriendshipsFriendships –Importance of friendships in conferring status AgreementsAgreements –Considers how agreements are reached

8. Strategic HR Issues in Global Assignments Approaches to sending employees abroadApproaches to sending employees abroad – Administrative approach Assisting employee destined for international assignment with paperwork and minor logisticsAssisting employee destined for international assignment with paperwork and minor logistics – Tactical approach Managing “risk or failure” factor of overseas assignment by providing paperwork assistance and modest amount of trainingManaging “risk or failure” factor of overseas assignment by providing paperwork assistance and modest amount of training – Strategic approach Extensive support and coordination of international assignment, and strategized repatriation program at the end of the assignmentExtensive support and coordination of international assignment, and strategized repatriation program at the end of the assignment Approaches to sending employees abroadApproaches to sending employees abroad – Administrative approach Assisting employee destined for international assignment with paperwork and minor logisticsAssisting employee destined for international assignment with paperwork and minor logistics – Tactical approach Managing “risk or failure” factor of overseas assignment by providing paperwork assistance and modest amount of trainingManaging “risk or failure” factor of overseas assignment by providing paperwork assistance and modest amount of training – Strategic approach Extensive support and coordination of international assignment, and strategized repatriation program at the end of the assignmentExtensive support and coordination of international assignment, and strategized repatriation program at the end of the assignment

9. Strategic HR Issues in Global Assignments Strategic management of global assignments 1.Establish specific purpose for assignment 2.Select appropriate employee for assignment 3.Organizational and individual purposes for assignment must be identified and matched 4.Assess adaptability to host culture of both employee and any family members who will be accompanying employee 5.Provide appropriate training for employee and family members 6.Simultaneous training should be conducted for headquarters staff Strategic management of global assignments 1.Establish specific purpose for assignment 2.Select appropriate employee for assignment 3.Organizational and individual purposes for assignment must be identified and matched 4.Assess adaptability to host culture of both employee and any family members who will be accompanying employee 5.Provide appropriate training for employee and family members 6.Simultaneous training should be conducted for headquarters staff

10. Exhibit 14-2 Strategic Issues

11. Exhibit 14-3 Strategic HR Issues

12. Determining Expatriate Compensation Balance sheet methodBalance sheet method –Expatriate salary based on home country pay –Additional expenses associated with relocation and assignment –Hardship and incentives to determine overall reimbursement and compensation level Balance sheet methodBalance sheet method –Expatriate salary based on home country pay –Additional expenses associated with relocation and assignment –Hardship and incentives to determine overall reimbursement and compensation level Higher-of-home-or- host methodHigher-of-home-or- host method –Employee’s salary at home adjusted upward to account for higher cost of living (localization approach) –Salary converted to host country’s equivalent when employee is on permanent assignment

13. Four Approaches to IHRM Make strategic decision as to level of standardization desired across locations –Ethnocentric approach Exporting organization’s home country practices and policies to foreign locationsExporting organization’s home country practices and policies to foreign locations –Polycentric approach Allowing each location to develop own practices and policiesAllowing each location to develop own practices and policies –Regiocentric approach Developing standardized practices and policies by geographic regionDeveloping standardized practices and policies by geographic region –Geocentric approach Developing one set of global practices and policies applied at all locationsDeveloping one set of global practices and policies applied at all locations Make strategic decision as to level of standardization desired across locations –Ethnocentric approach Exporting organization’s home country practices and policies to foreign locationsExporting organization’s home country practices and policies to foreign locations –Polycentric approach Allowing each location to develop own practices and policiesAllowing each location to develop own practices and policies –Regiocentric approach Developing standardized practices and policies by geographic regionDeveloping standardized practices and policies by geographic region –Geocentric approach Developing one set of global practices and policies applied at all locationsDeveloping one set of global practices and policies applied at all locations

14. Exhibit 14-4 Setting Strategic HR Standards

15. Exhibit 14-5 Repatriation

16. Reading 14.1 (Roberts et al.) Managing Global Workforce: Challenges and Strategies Challenges:Challenges: –Deployment in getting right skills to right place in organization, regardless of geographic location –Knowledge and innovation dissemination and transfer, where all business units concurrently receive and provide information –Talent identification and development of those employees with abilities and skills to function effectively in global organization Challenges:Challenges: –Deployment in getting right skills to right place in organization, regardless of geographic location –Knowledge and innovation dissemination and transfer, where all business units concurrently receive and provide information –Talent identification and development of those employees with abilities and skills to function effectively in global organization

17. Reading 14.1 Managing Global Workforce: Challenges and Strategies Strategies for managing global workforceStrategies for managing global workforce –Develop aspatial careers for employees to provide rich contextual knowledge of environments and cultures. Provide specific awareness building assignments that develop cross- sensitivity in high potential employees in short time –Utilize expert SWAT teams deployed on short-term basis for operational problems technical projects –Adopt virtual solutions by using electronic communication technologies to connect local employees to distant problems Strategies for managing global workforceStrategies for managing global workforce –Develop aspatial careers for employees to provide rich contextual knowledge of environments and cultures. Provide specific awareness building assignments that develop cross- sensitivity in high potential employees in short time –Utilize expert SWAT teams deployed on short-term basis for operational problems technical projects –Adopt virtual solutions by using electronic communication technologies to connect local employees to distant problems

18. Reading 14.1 Diagnosing Challenges Deployment challengeDeployment challenge –Contact time required –Extent to which skills can be applied out of cultural context Knowledge and innovation dissemination challengeKnowledge and innovation dissemination challenge –Choosing among four strategies depends on technical complexity of information to be shared, and extent to which it must be culturally embedded Talent identification and development challengeTalent identification and development challenge –Organizations should select well, then develop Deployment challengeDeployment challenge –Contact time required –Extent to which skills can be applied out of cultural context Knowledge and innovation dissemination challengeKnowledge and innovation dissemination challenge –Choosing among four strategies depends on technical complexity of information to be shared, and extent to which it must be culturally embedded Talent identification and development challengeTalent identification and development challenge –Organizations should select well, then develop

19. Reading 14.2 (Hallowell et al.) Four Seasons Goes to Paris Model of corporate culture consists of four componentsModel of corporate culture consists of four components –Underlying assumptions, such as subordinates should fulfill job requirements –Values “Espoused values”“Espoused values” “Enacted values”“Enacted values” Model of corporate culture consists of four componentsModel of corporate culture consists of four components –Underlying assumptions, such as subordinates should fulfill job requirements –Values “Espoused values”“Espoused values” “Enacted values”“Enacted values”

20. Reading 14.2 Four Seasons Goes to Paris –Employee perceptions of management practices – culture is what employees perceive management believes –Cultural artifacts If espoused values are enacted, culture may emerge in which senior management and employees share similar service-relevant thoughts, feelings, and patterns of behaviorIf espoused values are enacted, culture may emerge in which senior management and employees share similar service-relevant thoughts, feelings, and patterns of behavior Potential to enhance customer value and contribute to competitive advantagePotential to enhance customer value and contribute to competitive advantage –Flexibility versus consistency –Employee perceptions of management practices – culture is what employees perceive management believes –Cultural artifacts If espoused values are enacted, culture may emerge in which senior management and employees share similar service-relevant thoughts, feelings, and patterns of behaviorIf espoused values are enacted, culture may emerge in which senior management and employees share similar service-relevant thoughts, feelings, and patterns of behavior Potential to enhance customer value and contribute to competitive advantagePotential to enhance customer value and contribute to competitive advantage –Flexibility versus consistency

21. Reading 14.3 (Sanchez et al.) Adapting to a Boundaryless World 90% of companies base international selections on technical expertise, downplaying other areas90% of companies base international selections on technical expertise, downplaying other areas Openness to profound personal transformation is most fundamental sign of expatriate readinessOpenness to profound personal transformation is most fundamental sign of expatriate readiness Personality aspects that impede adaptationPersonality aspects that impede adaptation –Authoritarianism –Rigidity –Ethnocentrism Clarification of expectancies beforehandClarification of expectancies beforehand 90% of companies base international selections on technical expertise, downplaying other areas90% of companies base international selections on technical expertise, downplaying other areas Openness to profound personal transformation is most fundamental sign of expatriate readinessOpenness to profound personal transformation is most fundamental sign of expatriate readiness Personality aspects that impede adaptationPersonality aspects that impede adaptation –Authoritarianism –Rigidity –Ethnocentrism Clarification of expectancies beforehandClarification of expectancies beforehand

22. Reading 14.3 Adapting to a Boundaryless World Need to provide on-going, hands-on training, rather than just pre-departure awareness trainingNeed to provide on-going, hands-on training, rather than just pre-departure awareness training Training is opportunity to provide social supportTraining is opportunity to provide social support Executives should learn to view identification with host as compatible with identification with parent cultureExecutives should learn to view identification with host as compatible with identification with parent culture Expatriates need to become aware of consequences that old repertoire of coping responses has in host cultureExpatriates need to become aware of consequences that old repertoire of coping responses has in host culture Need to provide on-going, hands-on training, rather than just pre-departure awareness trainingNeed to provide on-going, hands-on training, rather than just pre-departure awareness training Training is opportunity to provide social supportTraining is opportunity to provide social support Executives should learn to view identification with host as compatible with identification with parent cultureExecutives should learn to view identification with host as compatible with identification with parent culture Expatriates need to become aware of consequences that old repertoire of coping responses has in host cultureExpatriates need to become aware of consequences that old repertoire of coping responses has in host culture

23. Reading 14.3 Adapting to a Boundaryless World Employer should facilitate integration into a local or regional network of other expatriatesEmployer should facilitate integration into a local or regional network of other expatriates Delicate equilibrium among multiple stakeholders calls for skills similar to those possessed by political diplomatsDelicate equilibrium among multiple stakeholders calls for skills similar to those possessed by political diplomats Parent organization should not create additional role conflict for the expatriate with policies that are insensitive to cultural differencesParent organization should not create additional role conflict for the expatriate with policies that are insensitive to cultural differences Employer should facilitate integration into a local or regional network of other expatriatesEmployer should facilitate integration into a local or regional network of other expatriates Delicate equilibrium among multiple stakeholders calls for skills similar to those possessed by political diplomatsDelicate equilibrium among multiple stakeholders calls for skills similar to those possessed by political diplomats Parent organization should not create additional role conflict for the expatriate with policies that are insensitive to cultural differencesParent organization should not create additional role conflict for the expatriate with policies that are insensitive to cultural differences

24. Reading 14.3 Adapting to a Boundaryless World RepatriationRepatriation –Feeling that others do not share multicultural identification can create sense of isolation –Frequent loss of autonomy –Unrealistic expectations about being promoted upon return RepatriationRepatriation –Feeling that others do not share multicultural identification can create sense of isolation –Frequent loss of autonomy –Unrealistic expectations about being promoted upon return