1. PowerPoint Presentation by Charlie Cook The University of West Alabama 15 © 2010 South-Western, a part of Cengage Learning All rights reserved.

2. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–2 Identify the types of organizational forms used for competing internationally. Explain the economic, political-legal, and cultural factors in different countries that HR managers need to consider. Explain how domestic and international HRM differ. Discuss the staffing process for individuals working internationally. Identify the unique training needs for international assignees and their employees Chapter Objectives After studying this chapter, you should be able to

3. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–3 Identify the characteristics of a good international compensation plan. Reconcile the difficulties of home- and host- country performance appraisals. Explain how labor relations differ around the world. Chapter Objectives (cont’d) After studying this chapter, you should be able to

4. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–4 Managing Across Borders International corporationInternational corporation  Domestic firm that uses its existing capabilities to move into overseas markets. Multinational corporation (MNC)Multinational corporation (MNC)  Firm with independent business units operating in multiple countries. Global corporationGlobal corporation  Firm that has integrated worldwide operations through a centralized home office. Transnational corporationTransnational corporation  Firm that attempts to balance local responsiveness and global scale via a network of specialized operating units.

5. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–5 FIGURE 15.1 Types of Organizations

6. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–6 Increasing Importance of Understanding Global Human Resources Management International Mergers and Acquisitions Global Human Resources Management Global Human Resources Management Foreign Human Resources Global Competition Market Access Opportunities

7. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–7 How International Companies Affect the World Economy Their production and distribution extend beyond national boundaries, making it easier to transfer technology.Their production and distribution extend beyond national boundaries, making it easier to transfer technology. They have direct investments in many countries, affecting the balance of payments.They have direct investments in many countries, affecting the balance of payments. They have a political impact that leads to cooperation among countries and to the breaking down of barriers of nationalism.They have a political impact that leads to cooperation among countries and to the breaking down of barriers of nationalism.

8. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–8 How Does the Global Environment Influence Management? Unified EconomiesUnified Economies  Closely partnered nations such as the European Union (EU) have developed into strong competitors.  Promotes job growth in trading nations. Cultural EnvironmentCultural Environment  The communication patterns, religion, values and ideologies, education, and social structure of a host country influence how HR is conducted in that country.

9. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–9 FIGURE 15.3 Cultural Environment of International Business

10. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–10 Domestic versus International HRM Issues in international HRM in helping employees adapt to a new and different environment outside their own country:Issues in international HRM in helping employees adapt to a new and different environment outside their own country:  Relocation  Orientation  Translation services

11. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–11 International Staffing Expatriates, or Home-country NationalsExpatriates, or Home-country Nationals  Employees from the home country who are on international assignment. Host-country NationalsHost-country Nationals  Employees who are natives of the host country. Third-country NationalsThird-country Nationals  Employees who are natives of a country other than the home country or the host country.

12. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–12 FIGURE 15.4 Changes in International Staffing over Time

13. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–13 Hiring Host-Country Nationals Advantages:Advantages: 1. Hiring local citizens is generally less costly than relocating expatriates. 2. Since local governments usually want good jobs for their citizens, foreign employers may be required to hire locally. 3. Most customers want to do business with companies they perceive to be local versus foreign.

14. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–14 Recruiting Internationally Work Permit, or VisaWork Permit, or Visa  Government document granting a foreign individual the right to seek employment. Guest WorkersGuest Workers  Foreign workers invited to perform needed labor. ApprenticeshipsApprenticeships  Vocational training programs in skilled trades. Transnational TeamsTransnational Teams  Teams composed of members of multiple nationalities working on projects that span multiple countries.

15. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–15 1 Global Laws and Pacts Prohibiting Discrimination U.S. laws affecting firms conducting business outside the United States: Title VII of the Civil Rights Act of 1964 Age Discrimination in Employment Act (ADEA) Americans with Disabilities Act (ADA) International laws that require nondiscrimination in employment: European Union (EU)—Equal Pay Directive International Labour Organization (ILO)—Equal Remuneration Convention No. 100 Organization for Economic Cooperation and Development Enterprises (OECD)—Guidelines for Multinational Enterprises United Nations—Global Compact

16. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–16 Selecting Global Managers Global ManagerGlobal Manager  A manager equipped to run an international business Skills Categories for Global ManagersSkills Categories 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

17. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–17 FIGURE 15.5 Comparison of Advantages in Sources of Overseas Managers

18. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–18 Selecting Global Managers 1.Begin with self-selection. 2.Create a candidate pool. 3.Assess core skills. Skills considered critical to an employee’s success abroad. Skills considered critical to an employee’s success abroad. 4.Assess augmented skills and attributes. Skills helpful in facilitating the efforts of expatriate managers Skills helpful in facilitating the efforts of expatriate managers

19. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–19 2 Skills of Expatriate Managers CORE SKILLS Experience Decision-making Resourcefulness Strategic thinking Adaptability Cultural sensitivity Change management Team building Maturity AUGMENTED SKILLS Technical skills Negotiation skills Strategic thinking Delegation skills Change management

20. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–20 FIGURE 15.6 Expatriate Selection Criteria

21. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–21 FIGURE 15.7 Causes of Expatriate Assignment Failure Family adjustment Lifestyle issues Work adjustment Bad selection Poor performance Other opportunities arise Business reasons Repatriation issues

22. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–22 Training and Development Essential training program content to prepare employees for working internationally:Essential training program content to prepare employees for working internationally:  Language training  Cultural training  Assessing and tracking career development  Managing personal and family life  Repatriation Culture shockCulture shock  Perpetual stress experienced by people who settle overseas.

23. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–23 FIGURE 15.8 Preparing for an International Assignment To prepare for an international assignment, one should become acquainted with the following aspects of the host country: 1.Social and business etiquette 2.History and folklore 3.Current affairs, including relations between the host country and the United States 4.Cultural values and priorities 5.Geography, especially its major cities 6.Sources of pride and great achievements of the culture 7.Religion and the role of religion in daily life 8.Political structure and current players 9.Practical matters such as currency, transportation, time zones, and hours of business 10.The language

24. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–24 3 Nonverbal Communications in Different Cultures

25. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–25 Training Methods Reviewing available information about the host company: books, magazines, video tapes.Reviewing available information about the host company: books, magazines, video tapes. Conversations with host country natives.Conversations with host country natives. Sensitivity training to become familiar with the customs and overcome prejudices.Sensitivity training to become familiar with the customs and overcome prejudices. Temporary assignments to encourage shared learning.Temporary assignments to encourage shared learning.

26. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–26 FIGURE 15.9 A Synthesis of Country Clusters

27. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–27 FIGURE 15.10 Selected Foreign-Born Executives Chevron, David O'Reilly (Ireland) Citigroup, Vikram Pandit (India) Dow Chemical, Andrew Liveris (Australia) PepsiCo, Indra Nooyi (India) Coca-Cola, Muhtar Kent (Turkey) Alcoa, Alain J. P. Belda (Morocco) Eli Lily, Sydney Taurel (Morocco) 3M, George W. Buckley (Great Britain) Eastman Kodak, Antonio Perez (Spain) COMPANY, NAME, AND COUNTRY OF ORIGIN

28. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–28 Assessing and Tracking Career Development Developmental and Career Advantages of an International Assignment:Developmental and Career Advantages of an International Assignment:  Increases the expatriate’s responsibilities and influence within the corporation  Provides a set of unique experiences beneficial to both the individual and the firm  Enhances understanding of the global marketplace  Offers the opportunity to work on a project important to the organization

29. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–29 4 Repatriation Checklist Before they go: Make sure there is a clear need for the international assignment. Don’t send someone abroad unnecessarily. Develop a clear set of objectives and expectations and time frames in which they should be met. Make sure that your selection procedures are valid. Select the employee and also look at and involve the employee’s family. Provide (or fund) language and cultural training for the employee and the employee’s family. Offer counseling and career assistance for the spouse. Establish career planning systems that reward international assignments and lead to promotion and knowledge sharing.

30. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–30 4 Repatriation Checklist (cont’d) While they are away: Jointly establish a developmental plan that focuses on the goal to be achieved. Tie performance objectives to the achievement of the goal. Identify mentors who can be a liaison and support person from home. Keep communications open so that the expatriate is aware of job openings and opportunities. Arrange for frequent visits back home (for the employee and the family). Make certain they do not lose touch with friends and relatives.

31. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–31 4 Repatriation Checklist (cont’d) When they come back home: Throw a “welcome home” party and arrange for a meeting with other former expatriates. Offer counseling to ease the transition. Arrange conferences and presentations to make certain that knowledge and skills acquired away from home are identified and disseminated. Set up an expatriate database to help other employees who go abroad later. Get feedback from the employee and the family about how well the organization handled the repatriation process..

32. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–32 Global Compensation Challenges Different countries have different norms for employee compensation:Different countries have different norms for employee compensation:  Financial (money) incentives versus nonfinancial incentives (prestige, independence, and influence)  Individual rewards versus collectivist concerns for internal equity and personal needs  General rule:  Match the rewards to the values of the local culture—create a pay plan that supports the overall strategic intent of the organization but provides enough flexibility to customize particular policies and programs to meet the needs of employees in specific locations.

33. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–33 FIGURE 15.11 Hourly Wages in Different Countries* *Hourly compensation costs in U.S. dollars for production workers in manufacturing. COUNTRY$/HOUR Norway 41.05 Denmark 35.45 Germany 34.21 Netherlands 32.34 Belgium 31.85 Sweden 31.80 Switzerland 30.67 Austria 30.46 Finland 29.90 Luxembourg 27.74 United Kingdom 27.10 Australia 26.14 Ireland 25.96 Canada 25.74 Italy 25.07 France 24.90 United States 23.82 COUNTRY$/HOUR Japan 20.20 Spain 18.83 Greece 16.10 Korea, Republic of 14.72 New Zealand 14.47 Israel 12.98 Singapore 8.55 Portugal 7.65 Czech Republic 6.77 Taiwan 6.43 Hungary 6.29 Hong Kong SAR (1) 5.78 Poland 4.99 Brazil 4.91 Mexico 2.75 Philippines 1.07 Sri Lanka 0.54

34. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–34 Compensation of Host-Country Employees Hourly wages can vary dramatically from country to country.Hourly wages can vary dramatically from country to country. Pay periods are different.Pay periods are different. Seniority may be an important factor.Seniority may be an important factor. High pay rates can upset local compensation practices.High pay rates can upset local compensation practices. Bonuses, profit-sharing, benefits and paid leave may be more extensive and legally required.Bonuses, profit-sharing, benefits and paid leave may be more extensive and legally required.

35. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–35 Compensation of Host-Country Managers Global Compensation SystemGlobal Compensation System  A centralized pay system whereby host-country employees are offered a full range of training programs, benefits, and pay comparable with a firm’s domestic employees but adjusted for local differences

36. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–36 Compensation of Expatriate Managers An effective international compensation program must:An effective international compensation program must: 1. Provide an incentive to leave the United States 2. Allow for maintaining an American standard of living 3. Provide for security in countries that are politically unstable or present personal dangers 4. Include provisions for good health care 5. Reimburse the foreign taxes the employee is likely to have to pay (in addition to having to pay domestic taxes) and help him or her with tax forms and filing 6. Provide for the education of the employee’s children abroad, if necessary 7. Allow for maintaining relationships with family, friends, and business associates via trips home and other communication technologies 8. Facilitate the expatriate’s reentry home 9. Be in writing

37. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–37 Expatriate Compensation Systems Home-Based PayHome-Based Pay  Pay based on an expatriate’s home country’s compensation practices Balance-Sheet ApproachBalance-Sheet Approach  A compensation system designed to match the purchasing power in a person’s home country 1.Calculate base pay 2.Figure cost-of-living allowance (COLA) 3.Add incentive premiums 4.Add assistance programs

38. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–38 Expatriate Compensation Systems (cont’d) Split PaySplit Pay  A system whereby expatriates are given a portion of their pay in the local currency to cover their day-to- day expenses and a portion of their pay in their home currency to safeguard their earnings from changes in inflation or foreign exchange rates Host-Based PayHost-Based Pay  Expatriate pay is comparable to that earned by employees in a host country to which the expatriate is assigned.

39. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–39 Expatriate Compensation Systems (cont’d) LocalizationLocalization  Adapting pay and other compensation benefits to match that of a particular country  Reduces resentment among local staff members if they are earning significantly less. Other IssuesOther Issues  Adequacy of medical care  Personal security  Compensation policies of competitors

40. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–40 Performance Appraisal of International Managers Who Should Appraise Performance?Who Should Appraise Performance?  Home-country evaluations  Host-country evaluations Adjusting Performance CriteriaAdjusting Performance Criteria  Augmenting job duties  Individual learning  Organizational learning Providing FeedbackProviding Feedback  Debriefing interview

41. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–41 The Labor Environment Worldwide International Differences in Unions:International Differences in Unions:  The level at which bargaining takes place (national, industry, or workplace)  The degree of centralization of union-management relations  The scope of bargaining (parties and issues)  The degree to which government intervenes  The degree of unionization and union strength  The political affiliations of unions

42. © 2010 South-Western, a part of Cengage Learning. All rights reserved.15–42 augmented skills balance sheet approach codetermination core skills cultural environment culture shock expatriates, or home-country nationals failure rate global compensation system global corporation global manager guest workers home-based pay host-based pay host country host-country nationals international corporation localization multinational corporation (MNC) repatriation split pay third-country nationals transnational corporation transnational teams work permit, or visa