1. Human Resource Management
Lecture-44

2. Managing Human Resources in an International Business

3. Stages of a Global Organization

4. Global or Trans- national
Domestic
International
Multinational
Global or Trans- national
Domestic: organization conducts business within one country
International: domestic firm exports products/services
Multinational: A firm with assembly and production facilities in several countries and regions of the world.
Global or Transnational: A firm with operations in many countries and highly decentralized operations – joint ventures or subsidiaries. The firm owes little allegiance to its country of origin and has weak ties to any given country.

5. Why?

6. The Evolution of Global Business

7. Exporting - Selling abroad
Licensing - Organization grants a foreign firm the right to use intellectual properties
Franchising - Parent company grants another firm the right to do business in a prescribed manner

8. Multinational corporation - Firm that is based in one country and produces goods or provides services in one or more foreign countries
Global corporation - Has corporate units in a number of countries that are integrated to operate as one organization worldwide

9. A citizen of one country living and working in another country.
Expatriate
A citizen of one country living and working in another country.

10. Multinational Corporation (MNC)
A firm with assembly and production facilities in several countries and regions of the world.

11. Transnational Corporation
A firm with operations in many countries and highly decentralized operations. The firm owes little allegiance to its country of origin and has weak ties to any given country.

12. HR and International Business Challenge

13. What HRM strategies are appropriate at different stages of internationalization?
How is the best employee mix (host-country and expatriate) determined?
Why do international assignments fail?
How are returning employees re-integrated into the firm?

14. Development
Knowledge & innovation dissemination
Identifying and development talent on a global basis

15. How Inter-country difference affects HRM?

16. Cultural factors
Economic factors
Labor cost factors

17. Cultural Perspective

18. politics, and laws of a country
Cultural Environment
Language, religion, values, attitudes, education, social organization, technology,
politics, and laws of a country

19. Dimensions to Culture Power distance Individualism
Uncertainty avoidance
Masculinity/femininity
Long-term/short-term orientation
It may be obvious that culture is important to HRM practices, but the relevance of this may be lost in a country like the United States, where many of the best-known theories of management practice are firmly rooted in Western culture. Shown here are five dimensions of culture set forth by Geert Hofstede. Extent to which individuals expect a hierarchical structure that emphasizes status differences between subordinates and superiors. Degree to which a society values personal goals, autonomy, and privacy over group loyalty, commitment to group norms, involvement in collective activities, social cohesiveness, and intense socialization. Extent to which a society places a high value on reducing risk and instability.
Degree to which a society views assertive or “masculine” behavior as important to success and encourages rigidly stereotyped gender roles. Extent to which values are oriented toward to future (saving, persistence) as opposed to the past or present (respect for tradition, fulfilling social obligation).

20. Dimensions on Which Cultures Differ

21. The nature of people
How people relate to others
Primary mode of activity
Conception of space
Time orientation

22. Impact of Culture on IHRM Practices

23. Aspects of culture you can see
Dress
Food
Climate
Housing

24. Aspects of culture you can’t see

25. Communication style
What motivates people
Role expectations
Negotiation styles
Non-verbal communication
Tempo of work
How tasks are assigned
Attitude toward authority

26. Cross-Cultural Differences in the Workplace

27. How interviews should be conducted
How managers should act with their subordinates
How negotiations should be conducted
How training should be delivered
How people should be paid for work

28. Difference in economic systems

29. In free enterprise systems-the need for efficiency tends to favor HR policies that value productivity, efficient workers and staff cutting where market dictate

30. In more socialist systems, HR practices tend to shift toward preventing unemployment, even at the expense of sacrificing efficiency

31. Why Discuss IHRM?

32. Becoming truly global requires effective management of a diverse international labor force

33. Defining “IHRM”
International HR Management is the strategic integration and alignment of HR practices with business objectives to enhance firm and employee performance around the globe

34. Performance Management Training
Think about how you would get talent IN → THROUGH → OUT of an organization on a global scale:
Recruiting
Selection
Compensation
Benefits
Performance Management
Training

35. Global HR: HR Planning
In deciding level of international involvement of the business….
HR provides information about relevant HR issues (e.g., local market pay rates, labor laws)
Decisions about where & how many employees are needed for each facility

36. International Staffing
Recruitment
Key Issues
Because of distance and lack of close, day-to-day relationships with headquarters in the home country, problems in foreign operations must be solved with little or no counsel or assistance from others. This makes staffing in international operations even more critical than usual. Three sources are available to staff international operations:
Expatriates. These are home country employees sent to fill staffing needs in the overseas operations.
Host-Country Nationals. These are natives of the host country hired locally.
Third-Country Nationals. These are natives of other countries, hired and relocated to fill staffing needs. This may be necessary if the host country does not have enough qualified or motivated workers.
Other issues include:
Recruitment. In general, employee recruitment in other countries is more regulated by government than in the U.S..
Selection. Success in staffing foreign operations hinges on several factors. HRM must track expatriate failure rates (25% to 50% is common) for unsatisfactory performance. Skill levels need to be identified including:
Core Skills. These are considered critical to an employee’s success abroad.
Augmented Skills. These are skills helpful in facilitating efforts of expatriate managers.
Also, the staffing of transnational teams - with members from multiple nationalities working on projects that span several countries is an issue. On a bright note, women tend to have a higher success rate than men in expatriate assignments, often as high as 97%.
Training and Development. These issues are covered on the following slides.
Selection
Training and Development

37. Global HR: Selection
Identify host-country, parent-country, & third-country nationals
Hire locally? For which jobs?
Anticipate emotional cycle associated with foreign assignment:
Culture shock
Learning
adjustment

38. Consider criteria associated with success in working overseas:
Competence in area of expertise
Ability to communicate verbally & nonverbally in foreign country
Flexibility, tolerance of ambiguity, & sensitivity to cultural differences
Motivation to succeed & enjoyment of challenges
Willingness to learn about country’s culture, language, customs
Support from family members

39. Selection of Employees for International Assignments

40. Emphasize cultural sensitivity as a selection criteria
Establish a selection board of expatriates
Require previous international experience
Screen candidates’ spouses and families
The choice of an employee for an international assignment is a critical decision. Because most expatriates work under minimal supervision in a distant location, mistakes in selection are likely to go unnoticed until it is too late. To choose the best employee for the job, managers should take the actions listed here.

41. Global HR: Training & Development
Consider differences when developing training
Norms for participation? Language? Content?
Cross-cultural preparation for international assignment (departure, assignment, return)
International assignments as a part of career paths (development)
Process for identifying employees

42. Four Step Approach to Training Overseas Candidates

43. Level 1 training focuses on the impact of cultural differences, and on raising trainees’ awareness of such differences and their impact on business outcomes.
Level 2 training aims at getting participants to understand how attitudes (both negative and positive) are formed and how they influence behavior.
Level 3 training provides factual knowledge about the target country.
Level 4 training provides skill building in areas like language and adjustment and adaptation skills.

44. Global HR: Performance Mgmt
Consider legal requirements, local business practices, national culture
Think about
What is rated & how it is rated
How much performance is measured
Norms for providing feedback

45. Global HR: Compensation
Pay level & relative worth of jobs may differ across counties (e.g., different labor markets)
Pay consistency vs. tailoring to location?
Consider company costs & ability to compete
Incentive pay
Benefits – legal issues, expectations

46. Why International Assignments Fail ?
It is important to understand the reasons behind expatriates’ high failure rates so that preventive measures can be taken. Many feel that the home office has forgotten them and that their career has been sidetracked. Many people who take international assignments cannot adjust to a different cultural environment . Only about one-third of MNCs provide any cross-cultural training to expatriates. The same traits that led to success at home can be disastrous in another country. International assignments may seem to be a convenient way of dealing with mangers who are having problems in the home office. The inability or unwillingness of the expatriate’s spouse and children to adapt to life in another country is one of the most important reasons for failure. The six factors shown here account for most failures, although their relative importance varies by firm.

47. Career blockage
Culture shock
Lack of pre-departure cross- cultural training
Overemphasis on technical qualifications
Family problems

48. Upon Return

49. Lack of Respect for Acquired Skills
Loss of Status
Poor Planning for Return Position
Reverse Culture Shock

50. Managing Host Country Employees

51. Adjust HRM practices to the norms and culture of the host country.
Develop training programs that are compatible with the host country’s views of the educational process.
Develop compensation systems that are adapted to what motivates employees in the host culture.

52. Let’s stop it here

53. Summary

54. Managing Human Resources in an International Business

55. How Inter-country difference affects HRM?

56. Cultural factors
Economic factors
Labor cost factors

57. Why Discuss IHRM?

58. Why International Assignments Fail ?
It is important to understand the reasons behind expatriates’ high failure rates so that preventive measures can be taken. Many feel that the home office has forgotten them and that their career has been sidetracked. Many people who take international assignments cannot adjust to a different cultural environment . Only about one-third of MNCs provide any cross-cultural training to expatriates. The same traits that led to success at home can be disastrous in another country. International assignments may seem to be a convenient way of dealing with mangers who are having problems in the home office. The inability or unwillingness of the expatriate’s spouse and children to adapt to life in another country is one of the most important reasons for failure. The six factors shown here account for most failures, although their relative importance varies by firm.

59. Upon Return