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Week3Lecturenotes.docx
International Human Resource Management: BUSMGT 761
Week 3
5
th
July 2021
Sourcing human resources
for global markets
It can be concluded that an adequate understanding of the cultural context, as it impacts on the behavior of an organization’s employees, is of critical importance. Thus, the results of cross-cultural comparative research may provide valuable hints to managers about how to cope with employees from foreign cultures. Furthermore, these research results can form the basis for the development of intercultural training measures. These results could also be of great use to HRM in an international firm because they could assist in undertaking a structured analysis of the transferability of specific elements of a parent firm’s existing HR policy to foreign subsidiaries. In this context, it would be conceivable to decide whether incentive systems for groups or for individuals would be effective in a specific culture.
Week 3
Examine various approaches to
international staffing
Examine
Outline pivotal role of international
assignments
Outline
Discuss the key drivers behind
expatriate failure
Discuss
Focus on recruitment and selection as
major factors in the success of global
assignments
Understand
This week expands on the role of staffing, recruitment, and selection in international operations to sustain international business operations.
Please go on the link provided on the slide for more detail.
Texas A&M University Associate Management Professor Anthony Klotz coined the phrase during an interview with Bloomberg Businessweek and predicts that people who stayed put during the uncertainty of the pandemic are getting ready to jump ship. A study by Microsoft found that 41% of the global workforce would consider leaving their current employer within the next year.
Why the discontent? It’s the perfect storm, says Shahar Erez, CEO of the freelance talent platform Stoke.
“The great resignation is propelled by three forces: the changing generation, the economic crisis, and the realization people have had that they can have a different social contract, spending more time with family when they work remote and skip the commute,” he says.
https://www.fastcompany.com/90646274/the
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great
-
resignation
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is
-
here
-
this
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is
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how
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employers
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should
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prepare?fbclid=IwAR0MwlIbOZscc_B
tFdjOKn_kbUA5ycppoqGPfY4cNSxLsF9ycAyx36mmozo
Start the conversation about creating a blended workforce with some full-time people and other independent contractors. You may even be able to retain some of your talent as independent contractors.
As people move toward work/life integration, organizations that support them will be in the best position to retain their workforce. “Employees now know you don’t have
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to give up one for the other to be better,” says Whitlock. “Organizations have an opportunity to step up and bring everyone together. Continue building on the good things that have come out of the pandemic. Our personal lives are deeply infused into our business interactions. Don’t just turn it off.”
Trends in
IA
KPMG Global
Assignment Policy &
Practices Survey (2019)
The data for the Global Assignment Policies and Practices survey (GAPP survey) has come from 250 global, cross industry organisations. 46 percent of the participants are from USA. Organisations with fewer than 10, 000 employees make up 29 percent of the survey population. The largest representation is from manufacturing (12 percent), technology (10 percent), financial services (7 percent), and consumer and retail products and energy (6 percent each).
Four
approaches to
international
staffing
(
EPRG model by Perlmutter,
1969)
•
Few foreign subsidiaries have autonomy
•
Strategic decisions are made at headquarters
•
Utilise Parent Country Nationals (PCNs)
Ethnocentric
•
Each subsidiary is treated as a distinct national entity
•
Some decision
-
making autonomy
•
Utilise Home Country Nationals (HCNs)
Polycentric
•
Global approach to business
•
Nationality is less important than ability so PCN or HCN
or Third Country National (TCN)
Geocentric
•
Focus on geographic regions
Regiocentric
Ethnocentric: few foreign subsidiaries have any autonomy, strategic decisions are made at headquarters, key positions in domestic and foreign operations are held by managers from headquarters, and subsidiaries are managed by staff from the home country (PCNs).
Polycentric: each subsidiary is treated as a distinct national entity with some decision-making autonomy. Subsidiaries are usually managed by local nationals (HCNs), who are seldom promoted to positions at headquarters, and PCNs are rarely transferred to foreign subsidiary operations.
Geocentric: the MNE takes a global approach to its operations, recognizing that each part (subsidiaries and headquarters) makes a unique contribution through its unique competence. It is accompanied by a worldwide integrated business, and nationality it is less important than ability.
Regiocentric: this approach reflects the geographic strategy and structure of the MNE. Like the geocentric approach, it utilizes a wider pool of managers, but in a limited way. Staff may move outside their home countries, but only within a particular geographic region. Regional managers may not be promoted to
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headquarters positions, but they do enjoy a degree of regional autonomy in decision making. For example, a US-based MNE could create three regions: Europe, the Americas, and Asia-Pacific.
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Advantages Disadvantages · Facilitates control and co-ordination • Imposing headquarters culture and · Effective liaison with home-office management style personnel • Expatriate adjustment issues (language · Familiarity for MNE mission, objectives, plus the socioeconomic, political, policies and practices cultural, legal environment) · Global career development opportunities • Family adjustment · Staff with the required KSAs, technical • Removes promotional pipeline / interrupts and managerial competencies succession planning for HCNs · Compensation disparity issues and high cost of expatriate packages |
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Advantages Disadvantages · Familiarity with socio-economic, cultural, • Difficulties exercising effective control political and legal environment home-office personnel over subsidiary · Familiarity with business practices operations · Continuity of staff and provides • Communication difficulties opportunity for advancement and • Lack of opportunity for PCNs (or HCNs) promotion for locals – improving them to get international and cross-cultural commitment and motivation experience · Lower cost in terms of compensation package and compliance (Work visas etc)
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Advantages Disadvantages · Arguable best compromise between • Host country’s sensitivities with respect to securing technical / managerial expertise nationals of specific countries (or genders and adapting to foreign socio-economic or other orientations) and cultural environment • Lack of opportunity for home country · Usually career international business nationals in terms of promotion managers · May be better informed than PCNs about the host-country cultural and institutional environment · Usually less expensive to maintain than PCN
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Determinants
of staffing
choices
Figure 5.1 (Dowling et al., 2017)
Figure 5.1 (p. 114) outlines the four determinants of staffing choices in an internationalizing firm:
Context specificities: cultural values may differ considerably between headquarters and the host country context (e.g., a cultural similarity between the parent country and subsidiary country as a moderator in the relationship between MNE strategy and subsidiary staffing; MNEs tend to staff culturally distant subsidiaries with PCNs) → Positive effect on labor productivity. The institutional environment includes, for example, the legal environment and the education system. The latter may be directly linked to staff availability on the local labor market. The type of industry in which the firm is active may have an impact as well.
Company specificities: the most relevant variables are MNE structure and strategy, international experience, corporate governance, and organizational culture.
Local unit specificities: an important factor here is the establishment method of the subsidiary, i.e., whether it is a Greenfield investment, a merger, an acquisition, or a shared partnership. Furthermore, the strategic role of a subsidiary, its strategic importance for the MNE as a whole, and the related questions of the need for control
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and the locus of decision-making can influence staffing decisions.
IHRM practices: selection, training and development, compensation, and career management (including expatriation and repatriation) play an important role in the development of effective policies required to sustain a preferred staffing approach.
These factors influence staffing practices and are interdependent.
If a company pursues the same staffing approach worldwide, it means that context and local unit specificities are neglected, i.e., this could be an ethnocentric approach.
Reasons for
International
Assignments
•
Position filling of managerial and/or technical
roles
•
Trouble
-
shooters
Direct Control
•
Communicate and adopt strategic mission (and
policies & procedures)
•
Facilitators and consultants
Strategic Knowledge Transfer
•
Socialization of locals into corporate values
via informal co
-
ordination and informal
communication networks
•
Network building and boundary spanning
Organisational Development
•
Developing global mindset in high
-
potential
future leaders
Management Development
Contemporary
Modes of
International
Assignment
•
1
-
5
years accompanied by family
Traditional Expatriate
•
6
-
months unaccompanied
12
STA Short Term Assignment
•
Periodic commuting often involving downtime at
home
•
Also known as FIFO
Commuter
•
Less than 1 month
Frequent Int Business Travel
•
TCNs with entrepreneurial global mindset
Self
-
initiated
•
International responsibilities managed from home
country
Virtual
International assignments could be long term (traditional expatriate) or as short as frequently travelling. With the advent of technology and post-Covid 19, organisations are making the best use of virtual teams wherever possible. This has implications on other HRM functions as an international assignee does not need to be physically present in another country and thus, this reduces the administrative tasks involved with relocation.
The term ‘international assignee’ is used to cover all types of international assignments.
The following factors need to be considered for virtual teams:
Good skills in communication technologies
Visits to the host country
Be aware of disadvantages (e.g., role conflict, dual allegiance, identification issues, potential cultural misunderstandings, and geographic distances that rule out normal group interaction)
Time management of virtual vs. ‘real’ work
Figure 5.2 (Dowling et al., 2017)
The roles of an expatriate
The reasons for using expatriates are not mutually exclusive. They do, however, underpin expectations about the roles that staff play as a consequence of being transferred from one country to another.
As an agent of direct control
The use of staff transfers can be regarded as a bureaucratic control mechanism, where the primary role is that of ensuring compliance through direct supervision. Such expatriates are also called as ‘bears’ as it reflects the level f dominance of this type of expatriate control. To a certain extent, using expatriates for control reflects an ethnocentric predisposition, but this can be important in ensuring subsidiary compliance, enabling strategic objectives for local operations to be achieved.
Agent of socialisation
Expatriates assist in the transfer of shared values and beliefs. They work as ‘bumble bees’.
Network builders
As employees move between various organisational units, their network of personal relationships changes, thus acting as ‘spiders’.
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Boundary spanners
Boundary spanning refers to activities such as gathering information, that bridge internal and external organisational contexts. Expatriates are considered boundary spanners because they can collect host-country information, act as representatives of their firms in the host country, and influence agents.
Language nodes
Fluent in both the host country and home country language.
Transfer of competence and knowledge
International assignments assist in knowledge sharing and competence transfer and encourage adoption of common work practices which may strengthen elements of corporate culture. Thus, they may contribute further to developing the social capital within the MNE.
GAPP Survey 2019 results
Differences between traditional and short
-
term assignments
Chapter 5
Source: Adapted from M.
Tahvanainen
, D. Welch and V. Worm ‘Implications of
Short
-
term International
Assignments
’,
European Management Journal
, Vol. 23, No. 6 (2005), p. 669, with permission from Elsevier.
A traditional assignment provides for good relationships with colleagues and constant monitoring, a plus for knowing you are doing things as expected. However, traditional assignments are expensive, less flexible, and often require dual-career considerations for the spouse and family of the expatriate.
Short term assignments are more flexible, simple, and cost-effective. However, work permits, tax issues, and poor relationships and their side-effects such as alcoholism and high divorce rates also tend to occur with short-term assignments.
See pp. 116-120, especially table 5.2.
Reasons for declining long
-
term
assignment
Source: Brookfield Relocation Services, 2016
38
%
19
%
13
%
12
%
7
%
11
%
General family concerns
Partner's career
Failure to support career
aspirations
Inadequate compensation
Quality of life at location
Other
Family remains the biggest reason why people may be reluctant for international assignments. Partner’s career is also another key reason people may be unwilling to move countries.
Factors that
influence
effectiveness
of
international
assignments
Open environment
•
Support for cross
-
fertilization of ideas
•
Implementation of
best practice
Knowledge/info travels
freely between
expatriate, host
country, and parent
country
Consideration for
personal networks
Some knowledge
transfer requires
longer assignments
Expatriate’s ability
and motivation to
act as an agent of
knowledge transfer
Abilities, motivations,
relationships of locals
These 6 factors impact on how effective an international assignee/expatriate will be for the international assignments.
Open environment with support for cross-fertilization of ideas and implementation of best practices
Knowledge/info travels freely between expatriate, host country, and parent country
Consideration for personal networks
Some knowledge transfer requires longer assignments (e.g., where there is much tastiness)
Expatriate’s ability & motivation to act as an agent of knowledge transfer Abilities, motivations, relationships of locals
See p. 120-121.
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· “premature end to an international assignment” · “premature end caused by a reason” (underperformance, or similar, during the assignment) · repatriate turnover (expatriate leaving the company shortly after repatriation) and repatriation problems
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Source: Harzing, A., & Christensen, C. (2004) "Expatriate failure: time to abandon the concept?", Career Development International, 9 (7), pp.616-626, https://doiorg.ezproxy.auckland.ac.nz/10.1108/13620430410570329
Expatriate failure is defined as the premature return of an expatriate before the assignment has been completed. See p. 125 of your textbook.
While expatriate failure is often overestimated in publications, MNEs should nevertheless be concerned about it, because this is an ongoing challenge that is associated with both direct and indirect costs.
Direct costs include airfares and associated relocation expenses, as well as salary and training.
The ‘invisible’ or indirect costs are harder to quantify in monetary terms, but they can prove to be more expensive for firms. Failure to address these costs may result in loss of market share, difficulties with host-government officials, and demands that expatriates be replaced with HCNs (affecting the MNC’s general staffing approach).
The possible effect on local staff is that morale and productivity could suffer.
Expatriate Failure : Rates
Table 5.3 (Dowling et al., 2017)
Source: R. L. Tung ‘Selection and Training Procedures of U.S., European, and Japanese Multinationals’ (1982), California Management Review, 25 (1), pp. 57-71 and p. 164; Z. Tungli and M. Peiperl ‘Expatriate Practices in German, Japanese, U.K., and U.S.
Multinational Companies: A Comparitive Survey of Changes’, Human Resource Management (2009) Vol. 48, No. 1 (2009), pp. 153-171. Reproduced with permission.
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Personal factors · Inability to adapt (manager or spouse) · Family problems · Partner dissatisfaction · Problems coping with higher responsibilities Firm-specific issues · Lack of support for expat and family · Poor candidate selection
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Most common reasons for expatriate failure.
Selection criteria, possibly compounded by ineffective expatriate management policies
Failure to adapt, poor performance
Spouse/partner dissatisfaction and other family concerns
See p. 133.
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Direct · Airfare, relocation expenses Indirect · Contact with host government officials, key clients · Loss of market share · Effect on local staff (morale and productivity) · Effect on expat and family
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The costs of expatriate failure can be both direct and indirect. The direct costs include airfares and associated relocation expenses, salary and training. The precise amount varies depending on the position, country of designation, exchange rates, and whether the ‘failed’ manager is replaced by another expatriate.
The invisible or indirect costs are harder to quantify in monetary terms but can prove to be more expensive for firms. Failure at this level may result in loss of market share, difficulties with host government officials and demands that expatriates be placed with HCNs (thus affecting the multinational’s general staffing approach).
Recruitment and
selection
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Talent Management Talent management is defined as: “The identification, nurture, progress, reward, and retention of key individuals who can aid the development of organisational sustainability” (Marchington, Wilkinson, Donnelly, & Kynighou, 2016, p. 205) This could be seen as involving the whole range of people-management activities! But most importantly, it is about planning supply and demand. |
Talent Management
It is a catch-all for so many different areas of HRM!
Talent needs to be retained. But orgs do not always identify their most talented employees.
There’s less loyalty now. 4 years average tenure
Talent management = the identification, nurture, progress, reward, and retention of key individuals who can aid the development of organizational sustainability. The exclusive versus inclusive view:
Exclusive: ‘war for talent’: Identify a small number of individuals who could make a big impact on organisations. Grade employees from A to C, typically the top 20% are graded A and resources are focused on them.
Inclusive: The opportunity for all employees to reach their full potential. Treat all employees as talent. A more even distribution of resources.
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23 Organisations take a variety of approaches in defining talent.
Thite
(2018)
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Definitions
25
Selection
=
Validly, reliably, and lawfully
discriminating between job applicants, in order to hire
an employee who best matches a job and/or
organisation’s requirements (Macky 2008).
Recruitment
=
Attracting people with the required
Knowledge, skills and attributes (KSAs), or
competencies, to apply for available positions within
an organisation (
Macky
, 2008)
Planning
=
Identifying current and future staffing
needs and developing plans to meet those needs. This
includes forecasting supply and demand, the creation
of job descriptions and person specifications, and
competency frameworks.
“Recruitment and selection are the foundation of all other HR activities. Get it wrong and it doesn’t matter how good the development programme is, how well an employer motivates its staff, how well it manages their performance, or even how well it rewards them – it is always making up for that one bad decision”.
“Firms should hire motivated capability” – i.e., people who can and will do the job.
Broadly, this will be about:
Planning: The purpose is to identify current and future staffing needs and plan to meet those needs using internal and external labour supply. (This week!)
Recruitment: The purpose of recruitment is to attract people with the required knowledge, skills, and attributes, or competencies, to apply for available positions in an organization (Macky, 2008) (This week and maybe next!)
Selection: The purpose is to validly, reliably, and lawfully discriminate between job applicants, in order to hire an employee who best matches a job or organisation’s requirements. (Next week!)
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The difference between these three is important to understand.
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Recruitment: Goals The ultimate goal of recruitment and selection: to find the right person for the right job at the right time Pre-hire: · The right candidates apply · Candidates stay in the pool · Candidates intend to accept an offer if it’s made Post-hire: · Low turnover of new hires · Job performance of recent hires · Positive attitudes of recent hires: high job satisfaction, commitment, wellbeing, etc. |
The effectiveness of recruitment can be gauged from pre-hire and post-hire goals.
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Recruitment: International v Domestic IHRM has: · Smaller number of external recruits · Preference for internal recruitment To reduce selection risk To secure present and past human capital investments · To consider country of assignment · Family impact relevant
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There is a considerable difference when recruitment is seen from IHRM lens as opposed to HRM lens. Although IHRM recruitment is involved with less numbers, however, there are complexities involved in terms of finding the right person who would be successful in that particular country’s environment. Family factors are extremely important as the move has implications for the entire family.
Selection process
Figure 5.3 (Dowling et al., 2017)
Factors such as technical ability, cross‐cultural suitability, family requirements, MNE requirements, language, and country/cultural requirements are all relevant and are illustrated in Figure 5.3 (p. 128).
Developing appropriate criteria is a critical IHRM issue. Selection is a two-way process between the individual and the organisation. A prospective candidate may reject the expatriate assignment, either for individual reasons such as family considerations, or for situational factors such as perceived toughness of a particular culture. It is a challenge for those responsible for selecting staff for international assignments to determine appropriate selection criteria. The factors in the above slide deal with factors involved in expatriate selection, both in terms of the individual and the specifics of the situation concerned. These factors are inter-related.
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Selection in practice… · recruitment and selection process is often informal, closed and politicised · HR is usually only involved late · even after the selection decision has been made and with too little time to do any meaningful cross-cultural training. · especially an issue when it comes to Short Term Assignees and other globally mobile employees who are not on traditional long-term assignment · over-emphasis on current ability/ skills · personal & family factors are given insufficient weighting · performing well in the home country does not mean this will simply translate over into a new and often very different environment
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Once the selection criteria for international assignments have been defined, processes need to be put in place to measure these criteria. However, it is relatively common in many MNEs that international selection processes can be rather informal. Most MNEs admit that technical and/or managerial skills are the dominant, and sometimes, only criteria used. Reliance on technical skills is mainly due to the fact that the reason for most international assignments is ‘position filling’.
Formal selection process
Figure 5.4 (Dowling et al., 2017)
However, MNEs sometimes adopt formal processes, which can be influenced by the maturity of the MNE, its stage in the internationalisation process and its size or industry. The type of position involved, the role of the HR function in the process, and whether the multinational is reactive rather than proactive where international selection is involved remains key factors in how selection processes work in MNEs.
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GAPP Survey 2019 GAPP Survey 2019 Although this is not an international example but is shows a trend where employers may look at non-traditional sources of recruitment. Visit the link given on the slide to read about this article.
IHRM
solutions for
dual career
couples
Inter
-
firm networking
Job
-
hunting assistance
Intra
-
firm employment
On
-
assignment career support
The case of
‘Female
Expatriates’
An increasing number
are women IAs; up to
around 20
-
% from
22
3
% in the 1980’s
Barrier? Family
Commitments
Barrier? Dual Careers
Increasingly
formalized
recruitment &
selection
Discrimination?
Paternalistic attitudes
and cultural barriers
Discrimination? ‘She
must
be exceptional’
https://www.tvnz.co.nz/one
-
news/new
-
zealand/hawkes
-
bay
-
employer
-
winning
-
workers
-
unorthodox
-
hiring
-
strategy
-
not
-
worried
-
cv
-
looks
Dual career couples are a constraining factor for MNEs wanting to hire for international assignments. The rise in dual career couples, along with the ageing population and other family-related situations, combine to make more people immobile. MNEs are aware of the dual couple challenge and have reacted by providing a series of resources. Important support measures include language training, educational assistance, employer-sponsored work permits and assistance with career planning.
Some of the unique challenges faced by women expatriates are:
Other non-PCN cultures may not be as accepting about women in the workplace. Women expatriates may have larger cultural hurdles to overcome on their way to being successful.
Related to this challenge is overcoming typically HR directors’ attitudes towards women, since these managers tend to be HCNs.
The dual career issue may be greater for women: fewer men may be willing to accompany their spouse abroad.
The
expatriate
glass ceiling
Table 5.6 (Dowling et al., 2017)
See pp. 137-139.
In 2020, as 114 million jobs were lost across the globe, employment losses were more for women than for men. And studies have found that during the crisis women assumed additional responsibilities, such as taking on more household, childcare and other caring duties – while continuing to work.
The Deloitte 2021 survey is from 5000 women participants across 10 countries between November 2020 and March 2021. The survey probed several areas related to their work lives, including their experiences during the pandemic and career expectations for the future.
Deloitte 2021: Women @ Work
–
A Global Outlook
77% of participants said that their job workload has increased as a result of the pandemic.
66% say they have the greatest responsibility for household tasks and more than half of those with children say they handle the majority of childcare.
Healthy boundaries between work and home have deteriorated. Only 22% of women believe that their employers have enabled them to establish clear boundaries between work and personal hours.
More than half have experienced some form of microaggression or harassment in the
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past year, ranging from the belief that their judgment is being questioned because they are women.
The data also shows that many of these events go unreported to employers, with concerns over career penalty being one of the main reasons cited. Almost a quarter of the women surveyed are considering leaving the workforce altogether as a result of their experience during the pandemic. The data also shows a link to workplace culture, with more than twice as many women who say they experienced noninclusive behaviours planning to leave the workforce altogether due to Covid-10 as those who have not.
The top reason cited overall for leaving their employer is lack of work-life balance, but women who have experienced non-inclusive behaviours are almost four times more likely to cite disagreement with their company’s values as a reason why they are considering leaving.
All of the women who were surveyed who work for gender equity leaders say they feel like their careers are progressing at a satisfactory rate.
The importance of the opportunity for development is also reflected by the responses when women were asked for the number one step organisations can take to improve gender equality.
Providing better learning opportunities, more interesting projects, and/or stretch assignments is one of the two most cited things organisations can do to support women’s development and ensure they stay. But the data shows that only a minority of employers are currently offering such opportunities.
Summary
Examined various approaches to international
staffing
Outline pivotal role of international
assignments
Discuss the key drivers behind expatriate
failure
Focused on recruitment and selection as major
factors in the success of global assignments
To summarise, recruitment and selection decisions in IHRM have serious implications in terms of an expatriate’s performance and hence, should be dealt with caution and care.
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