Feedback on the course HR
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Noe11e_ch_15_FINAL.pptxChapter 15
Managing Human
Resources Globally
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Learning Objectives
LO 15-1 Identify the recent changes that have caused companies to expand into international markets.
LO 15-2 Discuss the four factors that most strongly influence HRM in international markets.
LO 15-3 List the different categories of international employees.
LO 15-4 Identify the four levels of global participation and the HRM issues faced within each level.
LO 15-5 Discuss the ways companies attempt to select, train, compensate, and reintegrate expatriate managers.
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Introduction
Trend in Global Expansion
New markets = new customers
Moving production facilities may lower labor costs
Information technology
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Current Global Changes 1 of 4
European Union
European Economic Community (EEC) 1992
Confederation of most of the European nations that agree to engage in free trade with one another, with commerce regulated by an overseeing body called the European Commission (EC)
Shared currency (Euro)
LO 15-1
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Current Global Changes 2 of 4
North American Free Trade Agreement (NAFTA)
Canada, United States, and Mexico
Increased U.S. investment in Mexico
Many low-skilled jobs went south
Increased employment opportunities for Americans with higher-level skills
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Current Global Changes 3 of 4
The Growth of Asia
Singapore, Hong Kong, Malaysia have become significant economic forces
China
Population of more than 1 billion
Opening markets to foreign investors
Predicted to have larger economy than U.S.
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Current Global Changes 4 of 4
General Agreement on Tariffs and Trade
Reduce trade barriers globally
More than 100 member-nations
World Trade Organization (WTO)
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Figure 15.1 Factors Affecting Human Resource Management in International Markets
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Factors Affecting HRM in Global Markets 1 of 6
Culture
Most important factor
Often determines the other three factors affecting HRM in global markets
Often determines the effectiveness of various HRM practices
LO 15-2
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Culture is defined as “the set of important assumptions (often unstated) that members of a community share.”
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Factors Affecting HRM in Global Markets 2 of 6
Culture continued
Hofstede’s Cultural Dimensions
Individualism-collectivism
Power distance
Uncertainty avoidance
Masculinity-femininity
Long-term – short-term
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Individualism–collectivism describes the strength of the relation between an individual and other individuals in the society—that is, the degree to which people act as individuals rather than as members of a group.
The second dimension, power distance, concerns how a culture deals with hierarchical power relationships—particularly the unequal distribution of power.
The third dimension, uncertainty avoidance, describes how cultures seek to deal with the fact that the future is not perfectly predictable.
The masculinity–femininity dimension describes the division of roles between the sexes within a society.
Finally, the fifth dimension comes from the philosophy of the Far East and is referred to as the long-term–short-term orientation.
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Factors Affecting HRM in Global Markets 3 of 6
Culture continued
Implications of Culture for HRM
Has a profound impact on a country’s economic health by promoting certain values that either aid or inhibit economic growth
Influences the ways managers behave in relation to subordinates
May influence the appropriateness of HRM practices
Influences how employees value certain aspects of their work environment
Influences compensation systems and communication processes
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Factors Affecting HRM in Global Markets 4 of 6
Education-Human Capital
Educational opportunities
Countries with low human capital attract facilities that require low skills and low wage levels
Countries with high human capital are attractive sites for direct foreign investment that creates high-skill jobs
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Human capital refers to the productive capabilities of individuals—that is, the knowledge, skills, and experience that have economic value.
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Factors Affecting HRM in Global Markets 5 of 6
Political-Legal System
Often dictates the requirements for certain HRM practices, such as training, compensation, hiring, firing, and layoffs
Outgrowth of the culture/societal norms of a country
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Factors Affecting HRM in Global Markets 6 of 6
Economic System
Socialist system
Education is free, but little economic incentive
Higher taxes
Capitalist system
Cost to develop human capital is higher
Can reap monetary rewards
Developing countries
Low labor costs
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Figure 15.2 Hourly Compensation Costs in Manufacturing, U.S. Dollars, 2012
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Managing Employees in a Global Context 1 of 9
Types of International Employees
Types of countries
Parent countries
Host countries
Third countries
LO 15-3
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A parent country is the country in which the company’s corporate headquarters is located. For example, the United States is the parent country of General Motors. A host country is the country in which the parent country organization seeks to locate (or has already located) a facility. Thus, Great Britain is a host country for General Motors because GM has operations there. A third country is a country other than the host country or parent country, and a company may or may not have a facility there.
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Managing Employees in a Global Context 2 of 9
Types of International Employees continued
Types of employees
Expatriate
Parent-country nationals
Host country nationals
Third-country nationals
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The term expatriate is generally used for employees sent by a company in one country to manage operations in a different country. With the increasing globalization of business, it is now important to distinguish among different types of expatriates. Parent-country nationals (PCNs) are employees who were born and live in the parent country. Host-country nationals (HCNs) are those employees who were born and raised in the host, as opposed to the parent, country. Finally, third-country nationals (TCNs) are employees born in a country other than the parent country and host country but who work in the host country.
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Managing Employees in a Global Context 3 of 9
Levels of Global Participation
Domestic
International
Multinational
Global
LO 15-4
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Managing Employees in a Global Context 4 of 9
Levels of Global Participation continued
Transnational HRM
Transnational scope
Transnational representation
Transnational process
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Transnational scope refers to the fact that HRM decisions must be made from a global rather than a national or regional perspective.
Transnational representation reflects the multinational composition of a company’s managers.
Transnational process refers to the extent to which the company’s planning and decision-making processes include representatives and ideas from a variety of cultures.
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Managing Employees in a Global Context 5 of 9
Managing Expatriates in Global Markets
Average one-time cost for relocating an expatriate is $60,000
Average compensation package is approximately $250,000
Cost of an unsuccessful expatriate assignment (that is, a manager returning early) is approximately $100,000
LO 15-5
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Transnational scope refers to the fact that HRM decisions must be made from a global rather than a national or regional perspective.
Transnational representation reflects the multinational composition of a company’s managers.
Transnational process refers to the extent to which the company’s planning and decision-making processes include representatives and ideas from a variety of cultures.
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Managing Employees in a Global Context 6 of 9
Managing Expatriates in Global Markets continued
Selection of expatriate managers
Technical competence in area of operations
Adaptability
Cultural sensitivity
Self dimension
Relationship dimension
Perception dimension
Cultural intelligence
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Transnational scope refers to the fact that HRM decisions must be made from a global rather than a national or regional perspective.
Transnational representation reflects the multinational composition of a company’s managers.
Transnational process refers to the extent to which the company’s planning and decision-making processes include representatives and ideas from a variety of cultures.
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Table 15.3 Select Topics for Assessing Candidates for Overseas Assignments 1 of 7
Motivation
What are the candidate’s reasons and degree of interest in wanting an overseas assignment?
Does the candidate have a realistic understanding of what is required in working and living overseas?
What is the spouse’s attitude toward an overseas assignment?
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Table 15.3 Select Topics for Assessing Candidates for Overseas Assignments 2 of 7
Health
Are there any health issues with the candidate or family members that might impact the success of the overseas assignment?
Language ability
Does the candidate have the potential to learn a new language?
Does the candidate’s spouse have the ability to learn a new language?
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Table 15.3 Select Topics for Assessing Candidates for Overseas Assignments 3 of 7
Family considerations
How many moves has the family made among different cities or parts of the United States? What problems were encountered?
What is the spouse’s goal in this move overseas?
How many children are in the family, and what are their ages? Will all the children move as part of the overseas assignment?
Has divorce or its potential, or the death of a family member, had a negative effect on the family’s cohesiveness?
Are there any adjustment problems the candidate would expect, should the family move overseas?
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Table 15.3 Select Topics for Assessing Candidates for Overseas Assignments 4 of 7
Resourcefulness and initiative
Is the candidate independent and capable of standing by his or her decisions?
Is the candidate able to meet objectives and produce positive results with whatever human resources and facilities are available regardless of challenges that might arise in a foreign business environment?
Can the candidate operate without a clear definition of responsibility and authority?
Will the candidate be able to explain the goals of the company and its mission to local managers and workers?
Does the candidate possess sufficient self-discipline and self-confidence to handle complex problems?
Can the candidate operate effectively in a foreign country without normal communications and supporting services?
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Table 15.3 Select Topics for Assessing Candidates for Overseas Assignments 5 of 7
Adaptability
Is the candidate cooperative, open to the opinions of others, and able to compromise?
How does the candidate react to new situations and efforts to understand and appreciate cultural differences?
How does the candidate react to criticism, constructive or otherwise?
Will the candidate be able to make and develop contacts with peers in a foreign country?
Does the candidate demonstrate patience when dealing with problems? Is he or she resilient and able to move forward after setbacks?
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Table 15.3 Select Topics for Assessing Candidates for Overseas Assignments 6 of 7
Career planning
Does the candidate consider the assignment more than a temporary overseas trip?
Is the overseas assignment consistent with the candidate’s career development and one that was planned by the company?
What is the candidate’s overall attitude toward the company?
Is there any history or indication of interpersonal problems with this candidate?
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Table 15.3 Select Topics for Assessing Candidates for Overseas Assignments 7 of 7
Financial
Are there any current financial and/or legal considerations that might affect the assignment (e.g., house or car purchase, college expenses)?
Will undue financial pressures be put upon the candidate and his or her family as a result of an overseas assignment?
SOURCES: P. Caligiuri, Cultural Agility: Building a Pipeline of Successful Global Professionals (San Francisco: Jossey-Bass, 2012); P. Caligiuri, D. Lepak,
and J. Bonache, Managing the Global Workforce (West Sussex, United Kingdom: John Wiley & Sons, 2010); M. Shaffer, D. Harrison, H.
Gregersen, S. Black, and L. Ferzandi, “You Can Take It with You: Individual Differences and Expatriate Effectiveness,“ Journal of Applied Psychology
91 (2006), pp. 109–25; P. Caligiuri, “Developing Global Leaders,” Human Resource Management Review 16 (2006), pp. 219–28; P. Caligiuri, M. Hyland, A.
Joshi, and A. Bross, “Testing a Theoretical Model for Examining the Relationship between Family Adjustment and Expatriates’ Work Adjustment,” Journal of Applied
Psychology 83 (1998), pp. 598–614; David M. Noer, Multinational People Management: A Guide for Organizations and Employees (Arlington, VA: Bureau of National
Affairs, 1975).
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Managing Employees in a Global Context 7 of 9
Managing Expatriates in Global Markets continued
Training and Development of Expatriates
Cross-cultural training
Cultural self-awareness
Culture in the work environment
Communication differences
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Table 15.5 Expatriate Adjustment Factors
Work Environment (the employees, culture, and climate where the expatriate works)
Language (the ability of the expatriate to communicate)
Job or Task Characteristics (the expatriate’s freedom, autonomy and variety in how they work)
Leisure Time (opportunities to engage in sports, hobbies and other leisure activities)
Urbanity (pollution, traffic, and beauty of the location)
Work-Life Balance (ability to balance time spent at work and with family)
Living Quarters (size and type of living accommodations)
Family Life (family cohesion and harmony with partner)
Local Friendships (number and depth of local friendships)
Contact to Those Left Behind (ability to maintain relationships with family and friends in the home country)
Source: Hippler, T., Caligiuri, P., Johnson, J., Baytalskaya, N. (2014). The development and validation of a theory-based expatriate
adjustment scale. International Journal of Human Resource management, 25(14), 1938-1959.
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Managing Employees in a Global Context 8 of 9
Managing Expatriates in Global Markets continued
Compensation of Expatriates
Balance sheet approach
Base salary
Tax equalization allowance
Benefits
Cost-of-living allowances
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Figure 15.4 The Balance Sheet for Determining Expatriate Compensation
Jump to long description in appendix
SOURCE: From C. Reynolds, “Compensation of Overseas Personnel,” in J. J. Famulari, ed., Handbook of Human
Resource Administration, 2nd ed., 1986. Copyright © 1986. Reproduced with permission of The McGraw-Hill Companies, Inc.
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Managing Employees in a Global Context 9 of 9
Managing Expatriates in Global Markets continued
Reacculturation of expatriates
Culture shock
Importance of communication and validation
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Appendix of Image Long Descriptions
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Appendix 1 Figure 15.2 Hourly Compensation Costs in Manufacturing, U.S. Dollars, 2012
Norway $63.66
Switzerland $57.59
Sweden $49.80
Denmark $48.47
Australia $47.69
Germany $45.79
Austria $41.53
France $39.81
Netherlands $39.62
Canada $36.59
United States $35.67
Japan $35.34
Italy $34.18
United Kingdom $31.23
Spain $26.83
Singapore $24.16
Taiwan $9.46
Mexico $6.36
Philippines $2.10
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Appendix 2 Figure 15.4 The Balance Sheet for Determining Expatriate Compensation
A diagram shows home country salary includes income taxes, housing, goods and services, and reserve.
Host-country costs include home- and host-country income taxes, housing, goods and services, and reserve.
Host-country costs paid by company and from salary include income taxes, housing, goods and services, reserve, and other costs not paid for by company.
Home-country equivalent purchasing power includes premiums and incentives, income taxes, housing, goods and services, and reserve.
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