Lecture International business (9e): Chapter 19 - Charles W.L. Hill

Chapter 19 - Global human resource management. The main goals of this chapter are to: Discuss the importance of creating a company “global mindset”; explain the relationship between competitive strategies (international, multidomestic, regional, and transnational) and international HR management approaches (ethnocentric, polycentric, regiocentric, and global); compare home country, host country, and third country nationals as IC executives;...

International Business 9e  By Charles W.L Hill McGraw­Hill/Irwin         Copyright © 2013 by The McGraw­Hill Companies, Inc. All rights reserved Chapter 19 Global Human Resource Management McGraw­Hill/Irwin         Copyright © 2013 by The McGraw­Hill Companies, Inc. All rights reserved What Is Human  Resource Management?  Human resource management (HRM) - the activities an organization carries out to utilize its human resources effectively  more complex in an international business  These activities include determining human resource strategy, staffing, performance evaluation, management development, compensation, labor relations  expatriate managers  Firms need to ensure there is a fit between their human resources practices and strategy 19­3 What Is The Strategic Role Of  HRM In International Firms? The Role of Human Resources in Shaping Organizational Architecture 19­4 What Is A Staffing Policy?  Staffing policy - the selection of employees who have the skills required to perform a particular job  Three main approaches to staffing policy The ethnocentric approach - fill key management positions with parent-country nationals The polycentric approach recruit host country nationals to manage subsidiaries in their own country, and parent country nationals for positions at headquarters The geocentric approach seek the best people, regardless of nationality for key jobs 19­5 Which Staffing  Policy Is Best? Comparison of Staffing Approaches 19­6 What Is Expatriate Failure?  Firms using an ethnocentric or geocentric staffing strategy will have expatriate managers  expatriate failure is the premature return of an expatriate manager to the home country  The main reasons for Japanese expatriate failure are  the inability to cope with larger overseas responsibility  difficulties with the new environment  personal or emotional problems  a lack of technical competence  the inability of spouse to adjust 19­7 What Is Expatriate Failure?  The main reasons for U.S expatriate failure are  the inability of an expatriate's spouse to adapt  the manager’s inability to adjust  other family-related reasons  the manager’s personal or emotional maturity  the manager’s inability to cope with larger overseas responsibilities  The reason for European expatriate failure is  the inability of the manager’s spouse to adjust 19­8 How Can Firms Reduce  Expatriate Failure?  Firms can reduce expatriate failure through improved selection procedures  Four dimensions that predict expatriate success are Self-orientation - the expatriate's self-esteem, selfconfidence, and mental well-being Others-orientation - the ability to interact effectively with host-country nationals Perceptual ability - the ability to understand why people of other countries behave the way they Cultural toughness – the ability to adjust to the posting 19­9 Why Is A Global  Mindset Important?  A global mindset may be the fundamental attribute of a global manager  cognitive complexity  cosmopolitan outlook  A global mindset is often acquired early in life from  a family that is bicultural  living in foreign countries  learning foreign languages as a regular part of family life 19­10 What Is Training And  Management Development?  After selecting a manager for a position, training and development programs should be implemented  Training focuses upon preparing the manager for a specific job  Cultural training  Language training  Practical training  Management development is concerned with developing the skills of the manager over time  historically, most firms focus more on training than on management development 19­11 What Happens When  Expatriates Return Home?  Training and development should include preparing and developing expatriate managers for reentry into their home country organization need good programs for re-integrating expatriates back into work life within their home country organization utilizing the knowledge they acquired while abroad 19­12 How Should  Expatriates Be Evaluated?  Evaluating expatriates can be especially complex  typically, both host nation managers and home office managers evaluate the performance of expatriate managers  But, both types of managers are subject to unintentional bias  home country managers tend to rely on hard data when evaluating expatriates  host country managers can be biased towards their own frame of reference 19­13 What Are The Key Issues In  Compensating Expatriates?  Two key issues on compensation How to adjust compensation to reflect differences in economic circumstances and compensation practices  there are substantial differences in executive compensation across countries How to pay expatriate managers  most firms use the balance sheet approach 19­14  What Are The Key Issues In  Compensating Expatriates? A compensation package has five components Base salary - normally in the same range as the base salary for a similar position in the home country Foreign service premium - extra pay the expatriate receives for working outside his country of origin Various allowances - hardship, housing, cost-of-living, education Tax differentials - may have to pay income tax to both the home country and the host-country governments no reciprocal tax treaty exists Benefits – many firms provide the same level of medical and pension benefits abroad that employees receive at home 19­15 Why Are International Labor  Relations Important?  Organized labor is concerned that Multinationals can counter union bargaining power by threatening to move production to another country Multinationals will farm out only low-skilled jobs to foreign plants making it easier to switch production locations Multinationals will import employment practices and contractual agreements from their home countries and reduce the influence of unions 19­16 Why Are International Labor  Relations Important?  Organized labor has responded to the increased bargaining power of multinational corporations by Trying to set-up their own international organizations Lobbying for national legislation to restrict multinationals Trying to achieve regulation of multinationals through international organizations such as the United Nations  Many firms are centralizing labor relations to enhance the bargaining power of the multinational vis-à-vis organized labor 19­17 ... Self-orientation - the expatriate's self-esteem, selfconfidence, and mental well-being Others-orientation - the ability to interact effectively with host-country nationals Perceptual ability - the ability... service premium - extra pay the expatriate receives for working outside his country of origin Various allowances - hardship, housing, cost-of-living, education Tax differentials - may have to pay.. .Chapter 19 Global Human Resource Management McGraw Hill/ Irwin         Copyright © 2013 by The McGraw Hill Companies, Inc. All rights reserved What Is Human