1. Global Human Resource Management Chapter 18
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2. The Strategic Role of International HRM
Staffing policy:
Selecting individuals with requisite skills to do a particular job.
Tool for developing and promoting corporate culture.
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3. Strategy, Structure and Control Systems
International Strategy
Structure Multidomestic International Global Transnational and Controls
Centralization of operating decision
Decentralized Core competency Some centralized Mixed centralized
centralized and decentralized
Rest decentralized Informal matrix
Horizontal differentiation
Worldwide area Worldwide Worldwide Informal matrix
structure product division product division
Need for coordination
Low Moderate High Very high
Integrating mechanisms
None Few Many Very many
Performance Ambiguity
Low Moderate High Very high
Need for cultural controls
Low Moderate High Very high
Table 18.1
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4. Types of Staffing Policy
Ethnocentric:
All key management positions are filled by parent-company nationals.
Polycentric:
Host-country nationals manage subsidiaries, parent-company nationals have key positions at headquarters.
Geocentric:
Seek best people for key jobs, regardless of nationality.
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5. Comparison of Staffing Approaches
Staffing Strategic
Approach Appropriateness Advantages Disadvantages
Overcomes lack of Produces resentment
Ethnocentric International
qualified managers in host country
host nation
Unified culture Can lead to cultural
myopia
Helps transfer core competencies
Polycentric Multidomestic
Alleviates cultural Limits career mobility
myopia Isolates headquarters
Inexpensive to from foreign
implement subsidiaries
Geocentric Global and
Uses human resources National immigration
Transnational
efficiently policies may limit
implementation
Helps build strong culture and informal management network
Expensive
Table 18.2
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6. The Expatriate Problem
Expatriate failure:
Premature return of the expatriate manager to his/her home country.
Cost of failure is high:
Estimate - 3X the expatriate’s annual salary plus the cost of relocation (impacted by currency exchange rates and assignment location).
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7. Expatriate Failure Rates
Recall Rate Percent Percent of Companies
US Multinationals
% % %
<
European Multinationals
% %
<
Japanese Multinationals
% %
<
Table 18.3
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8. Reason for Expatriate Failure
US Multinationals
Inability of spouse to adjust.
Manager’s inability to adjust.
Other family problems.
Manager’s personal or emotional immaturity.
Inability to cope with larger overseas responsibilities.
Japanese Firms
Inability to cope with larger overseas responsibilities.
Difficulties with the new environment.
Personal or emotional problems.
Lack of technical competence.
Inability of spouse to adjust.
European Multinationals: Inability of spouse to adjust.
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9. Expatriate Selection Self-orientation: Others-orientation:
Strengthen self-esteem, self-confidence and mental well-being.
Others-orientation:
Enhance ability to interact with host-country nationals.
Perceptual ability:
The ability to empathize - understand why people in host-country behave the way they do.
Cultural toughness:
How well an expatriate adjusts to a particular posting tends to be related to the country of assignment.
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10. Training for Expatriate Managers
Cultural:
Seeks to foster an appreciation of the host-country’s culture.
Language:
Can improve expatriate’s effectiveness, relate more easily to culture and fostered a better firm image.
Practical:
Ease into day-to-day life of the host country.
1. Culture
2. Language
3. Practical
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11. Repatriation of Expatriates
Didn’t know what position they hold upon return.
Firm vague about return, role and career progression.
Took lower level job.
Leave firm within one year.
Leave firm within three years
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12. Performance Appraisal
Problems:
Unintentional bias.
Host-nation biased by cultural frame of reference.
Home-country biased by distance and lack of experience working abroad.
Expatriate managers believe that headquarters unfairly evaluates and appreciates them.
Many believe a foreign posting does not benefit their career.
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13. Guidelines for Performance Appraisal
More weight given to on-site manager’s evaluation.
Former expatriate who served in the same location should assist home-office manager with the evaluation.
If foreign on-sight manager preparing evaluation, home-office manager consulted before evaluation is finalized.
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14. A Typical Balance Sheet
Additional Costs Paid by Company
Home and Host-Country Income Taxes
Figure 18.1
Income Taxes
Premiums and Incentives
Income Taxes
Housing
Income Taxes
Housing
Goods and Services
Housing
Housing
Goods and Services
Goods and Services
Goods and Services
Reserve
Reserve
Reserve
Reserve
Home-Country Salary
Host-Country Costs
Host-Country Costs Paid by Company and from Salary
Home- Country Equivalent Purchasing Power
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15. International Labor Relations
Key issue: degree to which organized labor can limit the choices of an international business.
Labor concerns:
Counter bargaining power with threat to move jobs off-shore.
Keep high-skill work at home and ship low-skill work to foreign plants.
Importing employment practices and contractual agreements from the home-country.
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16. Strategy of International Labor
Try to establish international labor organizations.
Lobby legislatures to restrict multinationals.
Use United Nations to regulate multinationals.
Efforts have not been successful.
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17. Multinationals’ Approach to Labor Relations
Decentralize: labor laws, union power and nature of collective bargaining varies from country to country.
Centralize:
Want to rationalize global operations.
Need to control labor costs and maximize threat of move to lower cost country.
Before move, get new union approval for work practices.
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