1. 20-1 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall Part Six Managing International Operations Chapter Twenty Human Resource Management

2. 20-2 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall Chapter Objectives To discuss the importance of human resource management in international business To profile principal types of staffing policies used by international companies To explain the qualifications of international managers To examine how MNEs select, prepare, compensate, and retain managers To profile MNEs’ relations with organized labor

3. 20-3 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall Human Resource Management (HRM) Human resource management refers to activities necessary to staff the organization. HRM is more difficult for the international company than its domestic counterpart due to:  Environmental differences.  Organizational challenges.

4. 20-4 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall The Strategic Function of International HRM Research and anecdotes show that the MNE whose HRM policies support its chosen strategy creates superior value Many MNEs struggle to develop effective HRM policies An expatriate is an employee who leaves her or his native country to live and work in another. A third-country national is an employee who is a citizen of neither the home nor the host country.

5. 20-5 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall Staffing Policies Three perspectives describe how companies set about staffing their international operations, namely the:  ethnocentric - fills management positions with home-country nationals  polycentric - uses host-country nationals to manage local subsidiaries  geocentric approaches - seeks the best people for key jobs throughout the organization, regardless of their nationality Companies may use elements of each staffing policy but one type normally predominates While executive transferred from headquarters to local operations are more likely to best understand the company’s core competencies, an ethnocentric staffing can result in a narrow perspective in foreign markets

6. 20-6 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall Selecting Expatriates Technical competence often is the strongest determinant of who is selected for an international assignment. Adaptiveness refers to a person’s potential for  Self-maintenance and personal resourcefulness.  Developing satisfactory relationships.  Interpreting the immediate environment. Top managers in subsidiaries usually assume a greater range of leadership roles and broader duties than do managers of similar-size home- country operations.

7. 20-7 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall Expatriate Failure Expatriate failure is operationally costly and professionally detrimental. The improving sophistication of MNE selection procedures has reduced the rate of expatriate failure. A leading cause of expatriate failure is the inability of a spouse to adapt to the host country.

8. 20-8 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall Training Expatriates Training and predeparture preparations can lower the probability of expatriate failure. Increasingly, preparation activities include the spouse. Training and predeparture preparations often includes:  general country orientation  cultural sensitivity  practical skills MNEs usually anchor training programs to transfer specific information about the host country as well as improve the executive's cultural sensitivity.

9. 20-9 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall Compensating Expatriates Compensation must neither overly reward nor unduly punish a person for accepting a foreign assignment. The most common approach to expatriate pay is the balance sheet approach. MNEs often provide additional compensation or more fringe benefits to employees who work in remote or dangerous areas. Companies struggle to determine the proper degree to which they should equalize pay for the same job done in different countries.

10. 20-10 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall Repatriating Expatriates Repatriation, the act of returning home from a foreign assignment, has many difficulties Repatriation tends to cause dissonance in many areas, most notably  Financial.  Work.  Social. The principal cause of repatriation frustrations is finding the right job for someone to return to

11. 20-11 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall International Labor Relations A labor union is association of workers who have united to represent their collective views for wages, hours, and working conditions. Collective bargaining refers to negotiations between labor union representatives and employers to reach agreement on a work contract.

12. 20-12 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall How Labor Looks At The MNE Labor claims it is disadvantaged in dealing with MNEs because:  It is hard to get full data on MNEs’ global operations.  MNEs can manipulate investment incentives.  They can easily move value activities to other countries.  Ultimate decision making occurs in another country.

13. 20-13 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall How Labor Responds To The MNE Labor tries to strengthen its bargaining power through cross-national cooperation. Labor may be at a disadvantage in MNE negotiations because the  Country bargaining unit is only a small part of MNE activities.  MNE may continue serving customers with foreign production or resources. Falling union membership in many countries foreshadows lower bargaining power for labor, whereas the effort of MNEs to develop integrated labor relations across countries increases their bargaining power.