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Cross-Cultural Business

CHAPTER TWO

INTERNATIONAL

BUSINESS

The Challenges of Globalization

Canadian Edition

Wild • Wild • Valladares Montemayor

Chapter Objectives

Describe culture and explain the significance of national culture and subcultures

Identify the components of culture and describe their impact on international business

Describe cultural change and explain how companies and culture affect each other

Explain how the physical environment and technology influence culture

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In this chapter, you will come to understand the role of culture in international business.

You will also:

Learn the importance of national culture, subculture, and how each component of culture affects business activities.
Understand how cultures and companies change each other, and how the physical environment and technology influence cultures.
And acquaint yourself with two popular frameworks used to classify cultures.

Chapter Objectives

Describe the two main frameworks used to classify cultures and explain their practical use

Explain the three different types of staffing policies used by

international companies.

Describe the recruitment, selection, and cultural training

issues facing international companies.

Explain how companies compensate managers and workers

in international markets.

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What is Culture?

Set of values, beliefs, rules, and institutions held by a specific group of people

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Ethnocentricity

Belief that one’s own ethnic group or culture is superior to that of others

Cultural literacy

Detailed knowledge of a culture that enables a person to function effectively within it

√

Why should we try to avoid ethnocentricity?

1. It can cause us to view other cultures in terms of our own and cause us to overlook beneficial aspects of other cultures.

2. It can undermine our business projects if we are insensitive to cultural nuances.

Why should we work to develop cultural literacy?

1. Detailed knowledge about another culture can enable us to function effectively within it.

2. It can help bring us and our companies closer to customers’ needs and can increase business competitiveness.

Cultural Adaptability

Bridging the Gap

Building

Global Mentality

Flexibility is Key

Culture Matters:
Creating a Global Mindset

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A performer in a traditional Aztec dance costume

Guanajuato, Mexico

Photo: Gerry Taft, Mount Royal University

Here are several ways we, as future managers, can develop a global mindset:

Cultural adaptability means that a manager must be knowledgeable of an unfamiliar culture, then alter his or her behavior accordingly to lead multicultural teams.
Bridging the gap means employing creativity when Western management ideas are applied in Eastern cultures, and vice versa. For example, Western managers may implement “collective leadership” practices in Asia to better suit Asian values of group consensus.
Building global mentality involves developing our openness and flexibility toward all things unfamiliar, understanding global business principles, and improving our abilities to implement strategies.
Flexibility cannot be underestimated because the more behavioral the issue, the greater will be local culture’s influence on that issue.

National Culture

Nation states build museums and monuments to preserve the legacies of important events and people

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Photos: Gerry Taft, Mount Royal University

An original section of the Berlin Wall

A monument (tombstone) in the

Père Lachaise Cemetery, Paris, France

National culture generalizes across groups living within a nation. For example, British culture consists of English, Scottish, and Welsh influences.

Nations preserve the legacies of key events and important people instrumental in their cultural development.
Nations also intervene in business to preserve their cultures from being diluted by foreign influences.
Companies get involved in the support of cultures, in part, for the public relations benefits it provides.

Subculture

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People who share a unique way of life within a larger culture (language, race, lifestyle, attitudes, etc.)

EXAMPLES

Goth, Punk, Emo

China’s Dialects

Groups in U.S.

Arabs Globally

Subcultures can differ from the dominant culture in language, race, lifestyle, values, attitudes, and so forth.

Companies must be mindful of subcultures when formulating business strategies. For example, China has 50 ethnic groups within its territory.
Decisions regarding product design, packaging, and advertising must consider distinct cultures so as to appeal to buyers and not offend them.
Subcultures also can extend beyond national borders. For example, Arabs living worldwide can often be marketed to with a single campaign strategy.

Think – Pair – Share: test your Cultural Adaptability
A visit to the Night Market, Beijing, China

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The Night Market in Downtown Beijing is a place where you can try all kinds of “exotic” foods

Photo: Gerry Taft,

Mount Royal University

Slides 8 to 14 are the first “Think-Pair-Share” in this chapter. These slides are intended to stimulate discussion between students. The activity requires students to consider the question individually, and then share their thoughts with one classmate or a small group. The goals of these slides are to 1) improve students’ conceptual understanding of the material, 2) hone critical thinking skills, and 3) improve problem solving.

At the night market in Beijing
you can eat Snakes and Worms, and Dogs

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Photo: Gerry Taft,

Mount Royal University

The Night Market in downtown Beijing is a few minutes walk from Tiananmen Square and the Forbidden City. The market is several blocks in length, consisting of hundreds of small vendors selling all kinds of exotic food on sticks. If it is edible, it is sold on these streets! Each vendor has a metal cooking surface directly behind the “food”. You point at the item you would like to try, and the vendor places it on the high temperature cooking surface. They put some cooking oil on top of the food item and press it into the grill. Minutes later, your desired item is ready. Surprisingly, no matter what you select, it all tastes the same. The item is crunchy, and you taste the oil and spices the vendor has added, not the item itself. The night market is purely a tourist attraction, but definitely a “Must Experience” on a trip to Beijing.

At the night market in Beijing
you can eat Crabs and Frogs

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Photo: Gerry Taft,

Mount Royal University

At the night market in Beijing
you can eat Tarantulas and Giant Scorpions

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Photo: Gerry Taft

Mount Royal University

At the night market in Beijing
you can eat Giant Crickets

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Photo: Gerry Taft

Mount Royal University

At the night market in Beijing
you can eat Seahorses and Starfish

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When this picture was taken, the scorpions were very much alive and wriggling!

Photo: Gerry Taft

Mount Royal University

Think – Pair – Share

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Name three foods you would like to try, and three places you would like to visit.

Why should business people try to avoid ethnocentricity and develop cultural literacy?

A Belgian and a Canadian

enjoy Seahorses

on a stick!

Photo: Gerry Taft

Mount Royal University

The idea of the exercise is to personalize the notion of Cross Cultural awareness. It is one thing to see a person in a different location or style of clothing, but quite something else to put a strange or unfamiliar food into your mouth. This is usually a good time to talk to students about what to do if offered strange food or drink while on a business trip in a foreign land. Pepto-Bismol prior to going out will coat your stomach, but most food offered at any business meeting is entirely edible and very often delicious!

Answer to Discussion Question

Ethnocentricity distorts one’s views of other cultures and causes them to overlook important human and environmental differences among cultures. Cultural literacy improves the ability of managers to manage employees, develop and market products, and conduct negotiations in local markets.

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Answer:

Components of Culture

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Physical

environments

Education

Personal
communication

Religion

Social structure

Manners &
customs

Values &
attitudes

Aesthetics

Culture

Culture’s components include: aesthetics, values and attitudes, manners and customs, social structure, religion, personal communication, education, and physical and material environments.

Aesthetics

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Music

Painting

Dance

Drama

Architecture

In business, this means choosing appropriate colors for advertising, product packaging, and even work uniforms to improve the odds for success

Left - Police in London, England

Below – “Day of the Dead” sugar skulls in Mexico

Photo: Gerry Taft

Mount Royal University

We define aesthetics as all that a culture considers to be in “good taste” in the arts, the imagery evoked by certain expressions, and the symbolism of colors.

In business, this means choosing appropriate colors for advertising, product packaging, and even work uniforms to improve the odds for success.
Blunders can result from selecting inappropriate colors and symbols for advertising, product packaging, and architecture.

Values and Attitudes

Values

Attitudes

Positive or negative evaluations, feelings, and tendencies people hold toward objects or concepts

Ideas, beliefs, and customs to which people are emotionally attached

Freedom
Responsibility
Honesty

Time
Work
Cultural change

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In the context of international business, values affect people’s work ethic and desire for material possessions.

Attitudes are learned from role models, formed within a cultural context, and are more flexible than values.
For example, Latin American and Mediterranean cultures are casual about time, whereas people in Japan and the Canada arrive promptly for meetings and keep tight schedules.
Likewise, some cultures have a strong work ethic while others stress a balanced pace in work and leisure. In other words, a “live to work” versus a “work to live” mentality.
Cultural diffusion is the process whereby cultural traits spread from one culture to another, thereby causing cultural change.
Differences between the home and local culture can cause a firm to adjust business policies and practices, for example to introduce situational management techniques.
Around the world, cultural convergence is happening in some market segments for certain products.

Manners and Customs

Manners

Appropriate behavior, speech, and dressing in general

Customs

Traditional ways or behavior in specific circumstances

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In-depth knowledge of manners and customs improve a manager’s abilities and help avoid mistakes abroad.

Manners are generally acceptable ways of behaving, speaking, and dressing. For example, conducting business before, during, and after meals is commonly practiced in the United States, but may be unacceptable in another culture which prefers to wait until afterward.
Customs are habits and behaviors in specific circumstances and situations, such as the specific rules governing eating habits during the holy month of Ramadan.

Customs

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Photo: Gerry Taft, Mount Royal University

Day of the Dead celebrations in Mexico take place on October 31, November 1 and November 2. Families come to the cemetery to honour the departed. The grave sites are cleaned and adorned with flowers, candles and the persons favorite possessions.

Gift Giving

Folk

Popular

We, as future managers, should understand local customs where we will operate.

A folk custom dates back generations in a culture and is practiced within a homogeneous group of people. An example is the Muslim custom of wearing a turban.
A popular custom is practiced by a heterogeneous group or by several groups. The playing of golf worldwide is considered a popular custom.
Gift giving involves giving token gifts to business and government associates, yet the proper type of gift can differ across cultures.
In 2013, Canada significantly strengthened its Corruption of Foreign Public Officials Act (CFPOA). Canadian companies and individuals who are involved in the bribery of foreign public officials will be subject to Canadian law regardless of where the acts constituting the offence took place, and even if there is no connection with Canada other than their nationality. The exception allowing “facilitation payments” (small payments made to an official for the purpose of securing the performance of routine administrative acts that are part of the official’s duties or functions) will be eliminated at a future date to be determined by Cabinet order.

Discussion Question

Customs differ from _______ in that they define appropriate ways or behaviors in specific situations.

a. Values

b. Attitudes

c. Manners

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Customs differ from _______ in that they define appropriate ways or behaviors in specific situations.

a. Values

b. Attitudes

c. Manners

Answer to Discussion Question

Customs differ from _______ in that they define appropriate ways or behaviors in specific situations.

a. Values

b. Attitudes

c. Manners

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The correct answer is c. Manners

Social Structure

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Social group
Two or more people who identify and interact with each other

Social stratification
Process of ranking people into social layers

Social mobility
Ease of moving up or down a culture's "social ladder"

When it comes to the role of social structure in international business, we need to understand three key concepts.

Social groups contribute to an individual’s identity and self-image.
A nuclear family includes only immediate relatives, including parents, brothers, and sisters. This family group is common in Australia, Canada, Europe, and the United States.
An extended family includes grandparents, aunts, uncles, cousins, and relatives through marriage. This family group is found in Asia, the Middle East, North Africa, and Latin America.
Gender refers to socially learned traits associated with men or women. Cultures differ in their views of gender equality at work.
Social stratification involves the way in which a culture ranks people into social layers according to family heritage, income, and occupation.
Social mobility refers to the ease with which someone can move up or down a culture’s “social ladder.”
A caste system restricts people to the social ranking into which they were born, whereas a class system lets personal ability and actions decide social status and mobility.

World Religions

Christianity

Islam

Hinduism

Buddhism

Confucianism

Judaism

Shinto

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Religious beliefs are important to international business because they help shape people’s values. Religious views of work, savings, and material goods influence competitiveness, economic development, and business strategies.
Of the more than 300 denominations within Christianity, Roman Catholics are expected to refrain from placing materialism above God and people. Meanwhile, Protestants believe that salvation comes from faith in God and that hard work gives glory to God.
The world’s second largest religion is Islam. The word Islam means “submission to Allah” and the word Muslim means “one who submits to Allah.” Devout Muslims let their religion determine acceptable goods and services. For example, strict Muslims do not drink alcohol, eat pork, or charge interest on money lent.
In Hinduism, beliefs such as the caste system strongly influence people’s way of life and occupational options. Strict Hindus do not eat or harm living creatures because of a belief in reincarnation—rebirth of the human soul at the time of death.
Buddhism promotes a life centered on spiritual rather than worldly matters. Buddhists seek nirvana (escape from reincarnation) through charity, modesty, compassion for others, restraint from violence, and general self-control.
A focus on earning money violates strict beliefs in Confucianism. This is why merchants in China were distrusted years ago and why many moved their businesses elsewhere, including Indonesia, Malaysia, and Singapore. Business in South Korea reflects Confucian thought in its rigid organizational structure and reverence for authority.
Key holidays in Judaism include Rosh Hashanah (the Jewish New Year), Yom Kippur (the Day of Atonement), Passover (the Exodus from Egypt), and Hanukkah (an ancient victory over the Syrians). Work schedules might need adjustment for these holidays and the Sabbath (from sundown Friday to sundown Saturday). Fully observant Jews eat only “kosher” foods and do not eat pork and shellfish.
Shinto is the native religion of Japan. It teaches sincere and ethical behavior, loyalty and respect toward others, and enjoyment of life. Shinto manifests in the Japanese workplace through the practice of lifetime employment for workers and the high degree of trust between firms and customers. Shinto has also resulted in loyal workforces, low employee turnover, and good labor–management cooperation.

Personal Communication

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People in every culture have a communication system to convey thoughts, feelings, knowledge,

and information through speech, writing, and actions.

Photo: Gerry Taft, Mount Royal University

Communicating with a map, words and symbols in Iceland

People in every culture have a communication system to convey thoughts, feelings, knowledge, and information through speech, writing, and actions. Understanding a culture’s spoken language gives us great insight into why people think and act the way they do. Understanding a culture’s body language helps us avoid sending unintended or embarrassing messages. Let’s examine each of these forms of communication more closely.

Spoken and Written Language

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Provide a customer with a quality buying experience,

in their native language,

and you will have an edge on the competition.

Photo: Gerry Taft, Mount Royal University

Trans-Siberian train schedule

The importance of understanding local languages is becoming

increasingly apparent on the Internet. Roughly two thirds of all Web pages are in English, but around three quarters of all Internet users are non-native English speakers. Software solutions providers are assisting companies from English-speaking countries in adapting their Web sites

for global e-business. Web surfers from cultures across the globe bring their own specific tastes, preferences, and buying habits online with them. The company that can provide its customer in Mexico City, Paris, or Tokyo with a quality buying experience in his or her native language will have an edge on the competition

Language Blunders

Japanese knife manufacturer labeled its exports to the United States with “Caution: Blade extremely sharp! Keep out of children.”

English sign in a Moscow hotel read, “You are welcome to visit the cemetery where famous Russians are buried daily, except Thursday.”

Sign for non-Japanese-speaking guests in a Tokyo hotel read, “You are respectfully requested to take advantage of the chambermaids.”

“We take your bags and send them in all directions.”

Braniff Airlines’ English-language slogan “Fly in Leather”

was translated into “Fly Naked” in Spanish.

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A licence plate on

a motorcycle in Mexico

Photo: Gerry Taft, Mount Royal University

These are just a few of the many language blunders companies have made in their international business dealings.
Advertising slogans and company documents should be carefully translated so messages are received precisely as intended.

Lingua Franca

¿Hola? Guten Tag? Hello??

Ni Hao? Bonjour? Hello!!!

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Lingua franca is a third or “link” language that is understood by two parties who speak different languages.
Interestingly, although only 5 percent of the world’s population speaks English as a first language, it is the most common lingua franca in international business.

Universal Language ?

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Photo: Gerry Taft, Mount Royal University

These signs are on doors to restrooms in Minsk, Belarus

Mixed Signals

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Body Language is communicated through unspoken cues, including hand gestures, facial expressions, physical greetings, eye contact, and the manipulation of personal space.
People use it to communicate information and feelings and it differs significantly among cultures.

Think – Pair - Share

How does an understanding of the spoken, written, and body language in a market abroad contribute to business success?

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Photo: Gerry Taft, Mount Royal University

In North America a red annular ring with interdictory stroke indicates a prohibitive message. A green annular ring indicates a positive, permissive message.

Do you see the difference in this road sign from London, England?

This picture was taken outside of Hyde Park in London, England. It might take a moment to determine what the message on the sign is intended to mean, however the clue is that around the world, Red usually means “no” and Green usually means “yes” Easy enough to figure out on a bicycle, a bit more challenging if driving a car in fast moving traffic.

The folding bicycle in this picture traveled 42,000 km around the world. The 13,500 km section from London to Singapore was entirely by rail, with stops at major cities along the way. Many of the pictures in the PowerPoint slides accompanying this text were taken during this circumnavigation of the Earth.

OK then, What does this mean?

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Photo: Gerry Taft

Mount Royal University

This is a sign which is embedded in the road in London, England.

Answer to Discussion Question

Knowledge of a culture’s spoken and written language gives international managers insight into why people think and act the way they do.

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Answer:

Knowledge of a culture’s spoken and written language gives international managers insight into why people think and act the way they do.

Education

Cultures pass on traditions, customs, and values through schooling, parenting, group memberships, etc.

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Education level

Well-educated attract high-paying jobs, while poorly educated attract low-paying manufacturing jobs

Brain drain

Departure of highly educated people from one profession, geographic region or nation to another

An excellent basic education attracts high-wage industries that invest in training and increase productivity. For example, a skilled, well-educated workforce attracts high-paying jobs; a poorly educated one attracts low-paying jobs.
Brain drain refers to the departure of highly educated people from one profession, geographic region, or nation to another.
Reverse brain drain is when these highly educated individuals return to their homelands.

Problem of Illiteracy

Source: Based on World Development Indicators, World Bank Web site (www.worldbank.org).

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As we see in this table, some countries have a long way to go in increasing their literacy rate.
Worldwide, around 800 million adults remain illiterate.

Physical and Material Culture

These influence a culture’s development and pace of change

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Climate

Weather conditions of a geographic region define lifestyle, clothing, and work habits.

A small hut in Rural Iceland Photo: Gerry Taft, Mount Royal University

Topography

Physical features characterizing the surface of a geographic region .

Cultures isolated by mountains or water are less exposed to other cultures’ traits and change more slowly.

Material Culture

Technology used to manufacture goods and provide services.

Can be used to measure a culture’s technological advancement.

Topography plays an important role in defining a culture. Cultures isolated by mountains or water are less exposed to other cultures’ traits and so change more slowly. Topography affects people’s product needs and personal communication.
Climate affects where people settle and directs systems of distribution to the most efficient routes. It defines lifestyle, clothing, and work habits, such as organizing production schedules for idled machines during certain seasons of the year.
Material culture can be used to measure a culture’s technological advancement. Many nations display uneven levels of material culture across geography, markets, and industries. A company enters a market when demand for its products has developed, or the market is capable of supporting its production operations.

Kluckhohn-Strodtbeck Framework

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Relation to nature

Time orientation

Trust and control

Material or spiritual

Responsibility to others

View of personal space

This framework compares cultures by answering the following six questions:

1. Do people believe that their environment controls them, that they control the environment, or that they are part of nature?

2. Do people focus on past events, on the present, or on the future implications of their actions?

3. Are people easily controlled and not to be trusted, or can they be trusted to act freely and responsibly?

4. Do people desire accomplishments in life, carefree lives, or spiritual and contemplative lives?

5. Do people believe that individuals or groups are responsible for each person’s welfare?

6. Do people prefer to conduct most activities in private or in public?

Hofstede Framework

Long-term

orientation

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Individualism
vs. collectivism

Power

distance

Achievement
vs. nurturing

Uncertainty

avoidance

This framework compares cultures along five dimensions:

Individualism versus Collectivism. Individualist cultures value hard work, entrepreneurial risk-taking, and freedom to focus on personal goals. Collectivist cultures emphasize a strong association with family and work groups to maintain harmony and to work toward collective goals.

Power Distance. Large power distance means greater inequality between superiors and subordinates, more hierarchical organizations, and power derived from prestige, force, and inheritance. Small power distance implies greater equality, more equally shared prestige and rewards, and power derived from hard work and is often considered more legitimate.

Uncertainty Avoidance. Cultures having large uncertainty avoidance tend to value security, systems of rules/procedures, low employee turnover, and relatively slower change. Those with low uncertainty avoidance are more open to change and new ideas.

Achievement versus Nurturing. Cultures with high achievement versus nurturing scores emphasize assertiveness, the accumulation of wealth, and an entrepreneurial drive. Cultures rating low on achievement versus nurturing value relaxed lifestyles and are more concerned for others than they are with material gain.

Long-term Orientation. Cultures scoring high (strong) on long-term orientation place value on respect for tradition, thrift, perseverance, and a sense of personal shame. Cultures scoring low (weak) on long-term orientation tend to value individual stability and reputation, fulfilling social obligations, and reciprocation of greetings and gifts.

Power Distance &

Individualism vs. Collectivism

Source: Geert Hofstede, “The Cultural Relativity of Organizational Practices and Theories,” Journal of International Business Studies, Fall 1983, p. 82.

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This graph plots cultures according to the dimensions of power distance and individualism versus collectivism.
We see a tight grouping of nations within the five clusters, with Costa Rica on its own.
Quadrant 1 includes cultures with larger power distance and lower individualism. These nations are found in Africa, Asia, Central and South America, and the Middle East.
Quadrants 2 and 3 include cultures having higher individualism and smaller power distance scores. These are Australia and countries in North America and Western Europe.

Power Distance &

Uncertainty Avoidance

Source: Geert Hofstede, “The Cultural Relativity of Organizational Practices and Theories,” Journal of International Business Studies, Fall 1983, p. 84.

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This graph plots cultures according to the dimensions of power distance and uncertainty avoidance.
Quadrant 4 includes cultures with small uncertainty avoidance and small power distance. These are Australia, Canada, Jamaica, the United States, and most nations in Western Europe.
Quadrant 2 includes cultures with large power distance and large uncertainty avoidance. These are found in Asia, Central America, South America, and the Middle East.

Discussion Question

Cultures with small ____________ tend to display greater equality and a more equal distribution of rewards.

a. Individualism

b. Power distance

c. Uncertainty avoidance

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Cultures with small ____________ tend to display greater equality and a more equal distribution of rewards.

a. Individualism

b. Power distance

c. Uncertainty avoidance

Answer to Discussion Question

Cultures with small ____________ tend to display greater equality and a more equal distribution of rewards.

a. Individualism

b. Power distance

c. Uncertainty avoidance

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The correct answer is b. Power distance

International Human Resource Management

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Photo: Gerry Taft, Mount Royal University

La Défense, in Paris, France, is Europe's largest purpose-built business district with almost 200,000 daily workers

Perhaps the most important resource of any successful business is the people who comprise it.

If a company gives its human resource management practices the importance they deserve,

it can have a profound impact on performance. Highly trained and productive employees who

are proficient in their duties allow a company to achieve its business goals both domestically

and internationally. Human resource management (HRM) is the process of staffing a company

and ensuring that employees are as productive as possible. It requires managers to be effective

in recruiting, selecting, training, developing, evaluating, and compensating employees and in

forming good relationships with them.

Human Resource Management (HRM)

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Photo: Gerry Taft, Mount Royal University

A “help wanted” sign outside a restaurant in Manila, The Philippines. Does this sign indicate an Ethno, Poly, or

Geo-centric hiring policy?

HRM is the process of staffing a company

and ensuring that employees are as productive as possible.

It requires managers to be effective in recruiting, selecting, training, developing, evaluating, and compensating employees.

It requires managers to be effective in recruiting, selecting, training, developing, evaluating, and compensating employees and in forming good relationships with them.

International Staffing Policy

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Photo: Gerry Taft, Mount Royal University

A “help wanted” sign outside a restaurant in Singapore.

Does this sign indicate an Ethno, Poly, or Geo-centric hiring policy?

There are three

main approaches to the staffing of international business operations— ethnocentric , polycentric ,

and geocentric.

The customary means by which a company staffs its offices is called its staffing policy . Staffing

policy is greatly influenced by the extent of a firm’s international involvement. There are three

main approaches to the staffing of international business operations— ethnocentric , polycentric ,

and geocentric.

ADVANTAGES OF ETHNOCENTRIC STAFFING

First, locally qualified people are not always available Second, companies use ethnocentric staffing to recreate local operations in the image of homecountry operations. Finally, some companies feel that managers sent from the home country will look out for the company’s interests more earnestly than will host-country natives.

DISADVANTAGES OF ETHNOCENTRIC STAFFING

First, relocating managers from the home country is expensive. Second, an ethnocentric policy can create barriers for the host-country office.

ADVANTAGES AND DISADVANTAGES OF POLYCENTRIC STAFFING

Managers with deep cultural understanding of the local market can be an enormous advantage. They are familiar with local business practices and can read the subtle cues of both verbal and nonverbal language. Another important advantage of polycentric staffing is elimination of the high cost of relocating expatriate managers and families. This benefit can be extremely helpful for small and medium-sized businesses that cannot afford the expenses associated with expatriate employees. The major drawback of polycentric staffing is the potential for losing control of the hostcountry

operation.

ADVANTAGES AND DISADVANTAGES OF GEOCENTRIC STAFFING

Geocentric staffing helps a company develop global managers who can adjust easily to any business environment—particularly to cultural differences. This advantage is especially useful for global companies trying to break down nationalistic barriers, whether between managers in a single office or between different offices. One hope of companies using this policy is that a global perspective among its managers will help them seize opportunities that may otherwise be overlooked.

The downside of geocentric staffing is the expense. Understandably, top managers who are capable both of fitting into different cultures and being effective at their jobs are highly prized among international companies. The combination of high demand for their skills and their short supply inflates their salaries. Moreover, there is the expense of relocating managers and their families—sometimes every year or two.

Recruiting and Selecting Human Resources

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Any document you might need for a job! Photo: Gerry Taft, Mount Royal University Manila, The Philippines

How does a company know the number of managers and workers it needs?

How does it recruit the best available individuals?

How does it select from the pool of available candidates?

How does a company know the number of managers and workers it needs? How does it recruit the best available individuals? How does

it select from the pool of available candidates?

Training and Development for International Managers

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Environmental Briefings

Cultural assimilation

Language Training

Field experience

Environmental Briefings include information on local housing, health care, transportation, schools, and climate. Cultural orientations offer insight into social, political, legal, and economic institutions. Their purpose is to add depth and substance to environmental briefings.

Cultural assimilation teaches the culture’s values, attitudes, manners, and customs. Sensitivity training teaches people to be considerate and understanding of other people’s feelings and emotions.

Language Training This level of training entails more than memorizing phrases for ordering dinner or asking directions. It gets a trainee “into the mind” of local people. The trainee learns more about why local people behave as they do.

Field experience means visiting the culture, walking the streets of its cities and villages, and becoming absorbed by it for a short time

Employee Compensation

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cost of living

bonuses and fringe benefits

paid holidays

medical care

Photo: Gerry Taft, Mount Royal University

How much is fair compensation for this flower shop employee in

Thailand, compared to your home town? More, Less?

cost of living , which includes factors such as the cost of groceries, dining out, clothing, housing, schooling, health care, transportation, and utilities.

BONUS AND TAX INCENTIVES

base pay accounts for nearly all employee compensation in some countries. In others, bonuses and fringe benefits account for more than half of a person’s compensation.

CULTURAL AND SOCIAL CONTRIBUTORS TO COST

Some nations offer more paid holidays than others. Many offer free medical care to everyone living and working there. Granted, the quality of locally available medical care is not always good. Many companies, therefore, have plans to take seriously ill expatriates and family members home or to nearby countries where medical care is equal to that available in the home country.

Companies that hire managers in the local market might encounter additional costs engendered by social attitudes. For instance, in some countries employers are expected to provide free or subsidized housing. In others the government obliges employers to provide paid maternity leaves of up to one and a half years. Government-mandated maternity leaves vary significantly across European countries. Although not all such costs need to be absorbed by companies, they do tend to raise a country’s cost of doing business.

Bat on a stick, anyone ?

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This picture was taken at a corner store in Kowloon/Hong Kong

Photo: Gerry Taft,

Mount Royal University