3 Discussions and 2 weekly summary

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Learning Outcomes

Explain the political, economic, socio-cultural, and technological factors in different countries that HR managers need to consider
Identify the types of organizational forms used for
competing internationally
Explain how domestic and international HRM differ. Discuss the recruitment, selection, training, compensation, and performance appraisal needs for different types of employees working across borders
Explain how labor relations differ around the world

Introduction

Managing human resources across these international settings:
Leverage specialized skills
Provide cheaper labor
New ideas into the company
Issues in international HRM in helping employees adapt to a new and different environment outside their own country
Relocation
Orientation
Translation services

Analyzing Your International Environment

PEST (political, economic, socio-cultural, and technological) analysis
Audit of a company’s environmental influences to help them determine their strategy and HR response
PEST analysis can help you to:
Spot business or personnel opportunities
Spot trends in the business environment

Analyzing Your International Environment

Avoid implementing HR practices in a particular country where they can fail
Break free of old habits and assumptions about how people should be managed to help bring about innovative ideas for the entire company
Host country: Country in which an international corporation operates

Figure 15.1 - PEST Analysis

Analyzing Your International Operations

Figure 15.2 - Types of Organizations

Managing Your International Operations

Figure 15.3 - Changes in International Staffing over Time

Recruiting Internationally

Core criteria that are viewed as essential in worldwide recruiting efforts
Personal integrity
Drive for results
Respect for others
Capability
Virtually all countries have work permit or visa restrictions that apply to foreigners

Recruiting Internationally

Selecting Employees Internationally

Selecting employees in a foreign country environment can be difficult
Get to know the local market and customs in hiring
To understand local markets, HR managers can
Get to know the universities, technical schools, and primary schools in the area
Develop network in the business and government communities
Understand the employees of the firm’s competitors

Selecting Global Managers

Global manager: Manager equipped to run an international business
Skills required 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

Selecting Global Managers

Cultural environment: Communications, religion, values and ideologies, education, and social structure of a country
Core skills: Skills considered critical to an employee’s
success abroad
Augmented skills: Skills helpful in facilitating the efforts of expatriate managers

Selecting Global Managers

Steps involved in selecting individuals for an international assignment
Begin with self-selection
Create a candidate pool
Assess candidates’ core skills
Assess candidates’ augmented skills and attributes
Companies that have selected the best candidates experience high expatriate failure rates
Failure rate: Percentage of expatriates who do not perform satisfactorily

Figure 15.5 - Causes of Expatriate Assignment Failure

Figure 15.6 - Expatriate Adjustment Factors

Training and Development

When employees are sent aboard for an assignment, it is critical to provide them with training
Companies have found that good training programs help them attract the employees they need from host countries

Content of Training Programs

Employees working internationally need to know the:
Country where they are going
Country’s culture
History, values, and dynamics of their own organizations
Sensitivity training can help expatriates overcome ethnic prejudices

Figure 15.7 - Preparing for an International Assignment

Content of Training Programs

Essential training program content
Language training
Cultural training
Assessing and tracking career development
Managing personal and family life
Repatriation

Language Training

English is universally accepted as the primary language for international business
Designated language for meetings and formal discourse
Learning the language is only part of communicating in another culture

Cultural Training

Each culture has its expectations for the roles of managers and employees
Studying cultural differences can help managers identify and understand work attitudes and motivation in other cultures

Advantages of an International Assignment

Increase a person’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

Figure 15.9 - Selected Foreign-Born Executives

Managing Personal and Family Life

Culture shock: Perpetual stress experienced by people who settle overseas
Employers offer to accommodate dual-career partnerships such as
Spouses career and life planning counseling
Continuing education
Intercompany networks to identify job openings in other companies
Job-hunting/fact-finding trips
Help securing work permits abroad

Repatriation

Process of transition for an employee home from an international assignment
Designed to prepare employees for adjusting to life at home
Employees are given guidance about how much the expatriate experience have changed them and their families

Compensation

Different countries have different norms for
employee compensation
Financial incentives versus nonfinancial incentives
Individual rewards versus collectivist concerns for internal equity and personal needs
General rule
Create a pay plan that supports the overall strategic intent of the organization

Compensation of Host-Country Employees

Hourly wages can vary from country
to country
Paid on the basis of:
Productivity
Time spent on the job
Combination of these factors
Employee benefits can range from country to country

Compensation of Host-Country Managers

Global compensation system
Centralized pay system whereby host-country employees are offered a full range of:
Training programs
Benefits
Pay comparable with a firm’s domestic employees
Companies with centralized systems are having higher effectiveness and satisfaction levels with their compensation systems

Compensation of Expatriate Managers

Effective international compensation program must:

Provide an incentive to leave the United States

Allow for maintaining an American standard of living

Provide for security in countries that are politically unstable or present personal dangers

Include provisions for good health care

Reimburse the foreign taxes the employee is likely to have to pay and help him or her with tax forms and filing

Compensation of Expatriate Managers

Provide for the education of the employee’s children abroad, if necessary

Allow for maintaining relationships with family, friends, and business associates via trips home and other communication technologies

Facilitate the expatriate’s reentry home

Be in writing

Compensation of Expatriate Managers

Home-based pay: Based on an expatriate’s home country’s compensation practices
Balance-sheet approach: Compensation system designed to match the purchasing power in a person’s home country
Calculate base pay
Figure cost-of-living allowance (COLA)
Add incentive premiums
Add assistance programs

Compensation of Expatriate Managers

Split pay: System whereby expatriates are given a portion of the pay in the local currency to cover the day-to-day expenses
Portion of the pay in the home currency to safeguard the earnings from changes in inflation or foreign exchange rates
Host-based pay: Expatriate pay is comparable to that earned by employees in a host country to which the expatriate is assigned

Compensation of Expatriate Managers

Localization: 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 issues
Adequacy of medical care
Personal security
Compensation policies of competitors

Performance Appraisal

Appraisal of employee’s performance
Home-country evaluations
Host-country evaluations
Home versus host-country evaluations
Local managers with daily contact with the person are to have an accurate picture of his or her performance

Performance Appraisal

Performance criteria
Steps related to calculating the ROI of an assignment

Defining the assignment’s objectives

Agreeing on the quantifiable measurements for the assignment

Developing an equation that converts qualitative behavior into quantifiable measurements

Evaluating the expatriate’s performance against these measurements

Calculating the ROI

Performance Appraisal

Providing feedback

Purpose of repatriation interviews

Help expatriates reestablish old ties with the home organization

Address technical issues related to the job assignment itself

Address general issues regarding the company’s overseas commitments

Very useful for documenting insights an individual has about the region

Analyzing the International Labor Environment

Factors of union strength
Level of employee participation
Per capita labor income
Mobility between management and labor
Homogeneity of labor (racial, religious, social class)
Unemployment levels
Companies are increasingly giving offshore jobs to countries where labor costs are lower, unionized workers have been forced to make concessions

Collective Bargaining in Other Countries

When we look at other countries, process can vary widely, with regard to the role of government
Collective bargaining can take place at the firm, local, or national levels
Government involvement is only natural where parts of industry are nationalized

International Labor Organizations

International Trade Union Confederation (ITUC) - Active of the international union organizations
Headquarters in Brussels
International Labour Organization (ILO) - Specialized agency of the United Nations created in 1919

Labor Participation in Management

In European countries, provisions for employee representation are established by law
Codetermination: Representation of labor on the board of directors of a company
Power is with the shareholders who are assured the chairmanship