International human resource management lesson 03

UNIT II LESSON INTERNATIONAL HR PLANNING CONTENTS 3.0 Aims and Objectives 3.1 Introduction 3.2 Objectives of Human Resource Planning 3.3 Recruitment and Selection 3.3.1 Human Resource Forecasting 3.3.2 Determining Net HR Requirements 3.3.3 Recruitment 3.3.4 Realistic Job Previews 3.3.5 Selection 3.4 International Labour Market — Sources 3.4.1 Parent Country Nationals (PCNs) 3.4.2 Host Country Nationals (HCNs) 3.4.3 Third Country Nationals (TCNs) 3.5 Staffing Policies 3.5.1 Ethnocentric Approach 3.5.2 Polycentric Approach 3.5.3 Geocentric Approach 3.5.4 Regiocentric Approach 3.6 Recruitment and Selection in IHRM 3.6.1 Types of International Employees and their Required Competencies 3.6.2 International Migration and the Impact on Recruitment 3.6.3 International Talent Management 3.6.4 Local Selection and Assessment Issues 3.6.5 Selection Criteria 3.6.6 Development of an Effective Workforce 3.7 Let us Sum up 3.8 Lesson End Activity 3.9 Keywords 3.10 Questions for Discussion 3.11 Suggested Readings 52 International Human Resource Management 3.0 AIMS AND OBJECTIVES After studying this lesson, you will be able to: Know what is international HR Planning Describe recruitment and selection criteria for international organisation Explain staffing policies and appraises in global context 3.1 INTRODUCTION Human Resource Management is crucial to organisational competitiveness and productivity due to the growing diversity of the world’s workforce and its increasing importance The need to manage this diversity better has become a major challenge to the international manager The emergence of women as a major source of human resources for the corporates is part of that diversity If an international organisation is to survive in today’s competitive environment, it must successfully manage the increasing complexities of its human resources Human resource management is also growing in importance as multinational corporations continue to relocate their operations to those geographical areas where they can get the most for their human resource currency If large corporations intend to retain their domestic operations and still be competitive with respect to cost and quality, they will have to improve their human resource management Employees must be viewed as valuable assets—resources that are vital to the successful performance of the organisation Talented people must be attracted to join the organisation, developed to perform at high levels, and encouraged to remain with the organisation with loyalty and commitment to the organisation and its objectives In the Human Resource Cycle (Gupta, 2006) ‘selection process’ is the main variable influencing directly the ‘performance’ as also the ‘employee development process’ The four generic processes: selection, performance appraisal, rewards management and human resource development reflect sequential managerial tasks Performance, in other words, is a function of all the human resource components: selecting people who are able to best perform the job defined by the structure; motivating employees by rewarding them judiciously, training and developing people for future performance and appraising employees in order to justify the rewards The strategy and structure also impact performance through the manner in which the jobs are designed, how the organisation is structured and how well services and products are planned to meet environmental threats and opportunities These basic resource processes can be done at three levels: strategic level which deals with policy formulation and goal setting; managerial level which is concerned with the availability and allocation of resource to carry out the strategy plan; and at the operational level to carry out day-to-day activities When staffing overseas positions, the Multinational Corporation (MNC) has three major options: (1) an ethnocentric staffing approach, employing host country nationals; (2) a polycentric staffing approach, employing home country nationals; and (3) a geocentric staffing approach, employing third country nationals Host country nationals comprise the local workforce that can be hired by the international firm Home country nationals are those from the corporation’s home country Third country nationals are citizens from nations other than the host country nationals in developed countries Overall, most MNCs tend to use more host country nationals in developed countries On the other hand, U.S-based MNCs tend to employ more host country nationals in managerial positions because: (1) they are more familiar with the local culture; (2) they know the local language(s); (3) they cost less than home country nationals; and (4) employing locals is simply good public relations (Tung 1982) Many Western MNCs have found that the key to success on foreign soil is to employ local workers Analog Devices, Inc has achieved global success in a highly technical industry by hiring local managers, training them extensively, and then empowering them to hire and manage more local talent Similarly, global sales have soared at Bausch & Lomb by developing local managerial resources and turning them loose to develop their own geographical areas (Gilbert, 1988) The human resource selection process varies widely from one country to another However, it can be said that Asian corporations are known for their extensive testing and screening techniques Asians, overall, are very test-oriented and are comfortable with the testing process Europeans not test as much as Asians but considerably more than Americans Testing in the U.S has been discouraged because of its negative impact on equal employment and affirmative action efforts Testing and other rigorous staffing practices are used even less in Canada, where equal employment and human rights legislation is more restrictive than in the U.S In nations where there are more college graduates than good job openings, students must be aggressive if they are to land the better employment opportunities However, just the opposite is true in Japan, where job openings are far more numerous than the number of qualified college graduates As a result, students are put under a great deal of pressure to accept job offers far in advance of graduation Firms have become so aggressive in their attempts to push students into early offer acceptance that the Ministry of Education issued guidelines to control the favor of potential employers Students that feel employers are twisting their arms unfairly have a hot line they can all to report guideline violators Intermediaries, such as college professors, play a critical role in (a) helping employers identify potentially top candidates and (b) in encouraging students to accept certain offers Similarly, having taken a critical seminar from a certain professor is often given greater weight by employers than overall grades By contrast, the staffing process in Mexico is initiated by employers on a needs-base only, because there is always an overabundance of job candidates Help-wanted advertising in the newspapers is inefficient, because newspapers are so expensive that most potential workers can’t afford them As a result, job opening are communicated largely by word of mouth or by going out into the community and asking people to apply (Cherrington, 1991) Attracting an Effective Workforce Attracting an effective workforce is a complex task of identifying human resource needs and the actions that must be taken over time to satisfy these needs As shown in Figure 3.1, the task of attracting an effective workforce consists of human resource planning, job analysis, forecasting human resource requirements, forecasting human resource demand, forecasting internal supply, identifying the net human resource requirements, and filling those through recruitment, selection, training and development, transfer, and job rotation 53 International HR Planning 54 International Human Resource Management Human Resource Planning Environmental Scanning Business and Economic Forecasting Competitive Advantage Policies, Plans, Procedures Technical Needs Job Analysis Forecasting Human Resource Requirements Forecasting Internal Supply Forecasting Human Resource Demands Job Descriptions Quantity Location Timing Skills Available Promotability Trainability Key Personnel Net Human Resource Requirements Job Descriptions Quantity Location Timing Criticality Training and Development Recruitment Transfer and Job Rotation Selection Source: Manab Thakur et al., International Management (2002), p 246 Figure 3.1: Human Resource Planning 3.2 OBJECTIVES OF HUMAN RESOURCE PLANNING The major underlying objective of human resource planning is to lay the foundation from which the organisation will always have the right people in the right places to the work required by the organisation Human resource planning is part of the overall strategic planning of the employing organisation and includes such factors as: (1) environmental scanning; (2) business and economic forecasting; (3) developing and maintaining a competitive advantage in the marketplace; (4) determining long-range technical needs Job analysis: is the systemic study of job requirements and those factors that influence the performance of those job requirements Typically, a job analysis is the first step in the staffing process and is designed to identify who is to what, where, when, and how McCormick (1976) suggests that job analysis usually concentrates on: Work Activities—to identify precisely what tasks are to be accomplished Performance Standards—to identify the expected output in terms of both quantity and quality Work Technologies—to identify appropriate machine, tools, and other job technologies Job-Related Tangible and Intangibles—to identify the knowledge to be applied, materials to be processed, products to be made, or performances to be performed in the course of the work Job Context—to identify work conditions, social conditions, compensation, and work schedule Personal Requirements—to identify required skills, experience, education, training, and other attributes required for the job The above information may be obtained by observing incumbents on the job, by interviewing incumbents and/or their superiors, or through the administration of questionnaires The information collected through the job analysis is used, in turn, to create a written job description and a written job specification The job description usually is a listing of the job duties, the working conditions, and the tools, materials, and equipment used to perform the job Probably the most important portion of the job description is the listing of the minimum qualifications needed to fill the job This section is sometimes called the job specification, which is a list of the qualifications that the potential applicant must have 3.3 RECRUITMENT AND SELECTION 3.3.1 Human Resource Forecasting Human resource forecasting is the process by which an organisation estimates its future human resource needs The process of human resource forecasting is a two-stage operation First, it is necessary to forecast future human resource needs in terms of job description, quantity, location needed, and timing Second, it is necessary to make a forecast of the internal supply of human resources by surveying existing employees to identify available skills, knowledge, aptitudes, promotability, trainability, and the identity of key personnel Human Resource Forecasting may also be categorised as short-term forecasting According to Daft (1991), short-term forecasting is usually accomplished in five steps: The demand for the organisation’s product or service is estimated in the light potential changes in the environment The overall sales forecast is then estimated A staffing budget for each department is estimated Overall staffing requirements are estimated Consideration is then given to forecasted labour market conditions and internal factors (such as retirements) that might impact the human resource situation Long-term human resource forecasting follows much the same process but is much more complex and deals with greater uncertainty with respect to both those external and internal factors that might impact the labour scenario One of the most important steps in 55 International HR Planning 56 International Human Resource Management conducting the human resource forecast is the analysis of the abilities, education, experience, aptitude, and performance of existing employees This special task requires a human resource skills inventory of the major strengths and weaknesses of existing employees Such inventories are often computerised into an employee information system A good human resource inventory helps management plan development, training, and promotion activities for their subordinates It can also be a valuable part of an organisation’s formal succession planning by which plans are established for the orderly replacement of personnel over time Perhaps its most critical application is to the process whereby an organisation plans for the replacement of its key management personnel The human resource inventory can provide the information necessary to develop a management replacement chart 3.3.2 Determining Net HR Requirements Once an organisation has estimated its future demand and supply of human resource, the next step in the staffing process is to match the two forecast to identify areas of future overstaffing and areas of future manpower shortages If there is a predicted problem with overstaffing, the problem may be resolved by utilising attrition (not replacing people who leave), offering early retirements, transferring people to understaffed areas, and terminating people If there is a predicted shortfall of employees for the future, the problem may be resolved by discouraging retirements, hiring new people, transferring people from overstaffed areas, and installing labour-saving equipment and processes 3.3.3 Recruitment Recruitment may be defined as that process by which an organisation attracts people to apply for their job openings The goal is to recruit a pool of qualified candidates from which the desired people may be selected In order to be certain the recruitment process follows prescribed guidelines; organisations may establish recruitment; policies Recruitment can be categorised into two types: (1) external recruitment; and (2) internal recruitment Pierce and Dunham (1990) contend that external recruitment is conducted in four steps: Planning: Human resource managers must first determine those jobs they wish to fill, how many candidates they can reach and how many of them would accept the job offer Strategy Development: Next, a strategy is developed that specifies where to look for candidates, as well as how and when to look Searching: Based on the plan and the strategy, candidates are contacted and given job information and applications are collected From this pool of candidates, the required new people are hired Programme Evaluation: The recruitment programme must be continuously monitored, evaluated, and changed as required Typically, sources for external recruitment include direct applications received (walk-ins and applications by mail), public employment agencies, private employment agencies, executive search firms, schools and colleges, professional associations, all branches of the military, unions, the handicapped, summer interns, and former employees Internal recruitment consists of promotion from within, job posting, and contacts and referrals by current employees Another especially good source of recruitment candidates is through the collection of temporary, part-time, and contract workers that has become known as the “temps” (Cherrington, 1991) 3.3.4 Realistic Job Previews One technique of the recruitment process is known as the Realistic Job Preview (RJP), by which every candidate is given all the pertinent and realistic information about both the job and organisation Both the positive and negative sides of the job and the firm are included In this manner, a candidate can make a more-informed choice and select jobs for which he or she is better suited In the long run, the RJP helps to improve overall job satisfaction and performance It also avoids situations where dissatisfaction and poor performance results from a person finding that the job and its environment were not as advertised 3.3.5 Selection Selection may be defined as the process by which the organisation choose from among the applicants, those people who are perceived the best meet the job requirements For each candidate, the organisation evaluates candidate skills, education, experience, and so on to find the people who best ‘fit’ the particular job specification In other words, ideal selection identifies the best fit between the person and the job Box 3.1 describes the Japanese selection process used by Mitsubishi at its U.S plant Box 3.1: Employee Selection at Mitsubishi For the U.S based Mitsubishi-Chrysler joint venture auto plant, employees are selected the Japanese way The selection process lasts three days On the first day, applicants are required to perform tasks that mimic factory jobs Work-related tests are followed by a series of written, medical, and drug tests and a final screening by plant supervisors The selection process tests individuals for high level of skills, dedication to their work, an aptitude for learning new work methods, teamwork is expected Those who are selected must go through a rigorous training programme, where they learn technical skills, interpersonal skills, creativity facilitation, and idea-generation They are taught efficiency in the form of the Japanese philosophy of ‘kaizen’, or continual improvement This basic training is followed by several weeks of on-the-job training Later, promotion decisions are based, in part, on how well candidates in management development seminars and inbasket exercises In any respect, human resource management is a priority task in Japanese firms Mitsubishi’s relations with its U.S employees seem to be faring well, as the firm reports that over 50% of its U.S sales are vehicles that were manufactured in the U.S (Business Week, 1988) There are seven basic factors in the selection process: (1) application forms; (2) interviewing; (3) assessment centres; (4) employment testing; (5) reference checks; (6) physical examinations; and (7) selection validation Application Forms: Application forms are used by the organisation to obtain useful information about the candidates Most application blanks provide information with respect to the candidate’s education, experience, work history, and various background demographics In some countries, there are equal employment laws that protect minorities from unfair discrimination In such countries, employers should take care not to use the application blank to collect information that is irrelevant to job success or information that might prove to be detrimental to the minority candidate Employers must be aware of false statements that are apt to be found on application blanks This is in contrast to the approach of Shell, which is to provide a wider geographical exposure for managers as they progress up the career ladder Different competences are valued and different approaches to developing management competences are applied in different organizations, depending to a large extent on their 57 International HR Planning 58 International Human Resource Management view of international management and how this fits in with their overall international strategy and positioning Check Your Progress 1 Mention the steps involved in external recruitment Mention the basic factors (steps) in the selection process 3.4 INTERNATIONAL LABOUR MARKET — SOURCES There are three basic sources the MNCs can tap for overseas positions: (1) home or parent country nationals (PCNs); (2) host country nationals (HCNs); and (3) third country nationals (TCNs) 3.4.1 Parent Country Nationals (PCNs) PCNs are managers who are citizens of the country where the MNC is headquartered In fact, sometimes the term ‘headquarter’s nationals’ is also used These managers are commonly called expatriates or, simply, exports, which refers to those who live and work away from their parent country There are a variety of reasons for using PCNs The most common reason was to start up operations MNCs prefer to have their own people launch a new venture The second most common reason, was that the parent country people had the necessary managerial and technical expertise (Tung, 1982) 3.4.2 Host Country Nationals (HCNs) HCNs are local managers who are hired by the MNC There are many reasons for hiring them at the lower or middle-level ranks Many countries require the MNC to hire local talent as part of opening their markets to MNCs For example, in Brazil, two-thirds of employees in any foreign subsidiary have to be Brazilian nationals In India too, before approving joint venture agreements, the government restricts the number of expatriates to be employed, primarily to limit the foreign exchange outflow and to prepare Indian nationals to undertake the responsibility at a future time PCNs fill usually top positions, but this is not always the case For example, companies following the multi-domestic philosophy or polycentric approach would select most positions, including top ones, from the host country, but usually after starting the operations For example, Hindustan Lever Ltd, a subsidiary of the Unilever group in India is currently headed by an Indian Tung (1981) identified four reasons for use of host country managers: These individuals are familiar with the culture; They know the language; They are less expensive and know the way things are done, the rules of local market and how to get things done or who can influence; and Hiring them is good public relations 3.4.3 Third Country Nationals (TCNs) TCNs are managers who are citizens of countries other than the one in which the MNC is headquartered or the one in which it is assigned to work by the MNC Tung (1991) found that the two most important reasons that American MNCs use third country nationals are: These people have the necessary expertise, They were judged to be the best ones for the job Japanese companies usually not hire TCNs, while Phatak (1995) found that US companies usually prefer TCNs from Europe TCNs are found typically in large MNCs in advanced stages of growth A number of advantages are cited for using them One is that their salary package is usually less than that of a PCN The knowledge of local language, like English was the reason for choosing British managers by US companies in former British colonies like India, Jamaica, West Indies and Kenya Today, a new breed of multi-lingual, multi-experienced ‘global-managers’ has emerged These new managers are part of a growing group of international executives who can manage across borders and not fit the traditional third country mould With a unified Europe, and North America and Asia becoming business hubs, such global managers are in great demand 3.5 STAFFING POLICIES The four approaches to multinational staffing decisions—ethnocentric, polycentric, geocentric, and regiocentric—tend to reflect the managerial philosophy towards international operations held by top management at headquarters 3.5.1 Ethnocentric Approach An ethnocentric approach to staffing results in all key positions in a multinational being filled by Parent-Country Nationals (PCNs) While this approach may be common for firms at the early stages of internationalization, there are often sound business reasons for pursuing an ethnocentric staffing policy A perceived lack of qualified Host-Country Nationals (HCNs), and The need to maintain good communication, coordination, and control links with corporate headquarters For instance, when a multinational acquires a firm in another country, it may wish to initially replace local managers with PCNs to ensure that the new subsidiary complies with overall corporate objectives and policies, or because the local staff may not have the required level of competence An ethnocentric policy, however, has a number of disadvantages Zeira (1976) has identified several major problems: An ethnocentric staffing policy limits the promotion opportunities of HCNs, which may lead to reduced productivity and increased turnover among that group The adaptation of expatriate managers to host countries often takes a long time during which PCNs often make mistakes and make poor decisions When PCN and HCN compensation packages are compared, the often-considerable income gap in favour of PCNs is viewed by HCNs as unjustified For many expatriates a key international position means new status, authority, and an increase in standard of living These changes may affect expatriates’ sensitivity to the needs and expectations of their host-country subordinates 59 International HR Planning 60 International Human Resource Management 3.5.2 Polycentric Approach A polycentric staffing policy is one in which HCNs are recruited to manage subsidiaries in their own country and PCNs occupy positions at corporate headquarters The main advantages of a polycentric policy, are: Employing HCNs eliminates language barriers, avoids the adjustment problems of expatriate managers and their families, and removes the need for expensive cultural awareness training programmes Employment of HCNs allows a multinational company to take a lower profile in sensitive political situations Employment of HCNs is less expensive, even if a premium is paid to attract highquality applicants Employing HCNs gives continuity to the management of foreign subsidiaries This approach avoids the turnover of key managers that, by its very nature, results from an ethnocentric approach Box 3.2: What works at home does not necessarily work abroad A four-day strike and pay rises of 10-15% were part of the cost paid by a South Korean textile firm for an incident involving one of the expatriate managers in its Vietnamese factory A Vietnamese worker was confronted by his South Korean boss Speaking in Korean, the manager yelled at him for being in the wrong place in the factory As he did not understand, the Vietnamese did not respond The South Korean manager kicked and slapped him — as ‘in South Korea it is common for employers to scold or even beat employees if they make a big mistake’ Here, though, such behaviour resulted in 10 of the Vietnamese’s co-workers retaliating in kind The manager was rushed to hospital and the workers went on strike The South Korean manager was subsequently deported Source: Far Eastern Economic Review, August 10 (1995) p 63 A polycentric policy, however, has its own disadvantages Perhaps the major difficulty is that of bridging the gap between HCN subsidiary managers and PCN managers at corporate headquarters A second major problem associated with a polycentric staffing policy concerns the career paths of HCN and PCN managers 3.5.3 Geocentric Approach The geocentric approach option utilizes the best people for the key jobs throughout the organization, regardless of nationality There are two main advantages to this approach: it enables a multinational firm to develop an international executive team, and it overcomes the “federation” drawback of the polycentric approach Phatak (1995) believes the feasibility of implementing a geocentric policy is based on five related assumptions: Highly competent employees are available not only at headquarters, but also in the subsidiaries; International experience is a condition for success in top positions; Managers with high potential and ambition for promotion are constantly ready to be transferred from one country to another; Competent and mobile managers have an open disposition and high adaptability to different conditions in their various assignments; and Those not blessed initially with an open disposition and high adaptability can acquire these qualities as their experience abroad accumulates There are disadvantages associated with a geocentric policy First, host governments want a high number of their citizens employed and will utilize immigration controls in order to force HCN employment if not enough people with adequate skills are available Most Western countries require companies to provide extensive documentation if they wish to hire a foreign national instead of a local national Providing this documentation can be time-consuming, expensive, and at times, futile Another disadvantage is that a geocentric policy can be expensive to implement because of increased training and relocation costs Finally, large numbers of PCNs, TCNs, and HCNs need to be sent abroad in order to build and maintain the international team required to support a geocentric staffing policy 3.5.4 Regiocentric Approach One illustration of this approach is a regiocentric policy, which Heanan and Perlmutter (1979) define as functional rationalization on a more-than-one country basis The specific mix will vary with the nature of a firm’s business and product strategy For example, a U.S-based firm could create three regions: Europe, the Americas, and Asia-Pacific Staff transfers to the Asia-Pacific region from Europe would be rare, as would transfers from the regions to headquarters in the United States One motive for using a regiocentric approach is that it allows interaction between executives transferred to regional headquarters from subsidiaries in the region and PCNs posted to the regional headquarters There are some disadvantages in a regiocentric policy It can produce federalism at a regional rather than a country basis and constrain the organization from taking a global stance Another difficulty is that while this approach does improve career prospects at the national level, it only moves the barrier to the regional level Staff may advance to regional headquarters but seldom to positions at the parent headquarters Based on the attitudes of the top management a multinational can pursue one of several approaches to international staffing It may even proceed on an ad hoc basis, rather than systematically selecting one of the four approaches discussed above The approach of an appropriate policy on executive nationality tends to reflect organizational needs For instance, if the multinational places a high priority on organizational control, then an ethnocentric policy will be adopted However, there are difficulties in maintaining a uniform approach to international staffing Therefore, strategies in different countries may require different staffing approaches 3.6 RECRUITMENT AND SELECTION IN IHRM IHRM issues that a global organisation inevitably faces are such as the debate over the selection, recruitment, compensation, legal and regulatory requirements of the emerging 'global workforce' Because the globalisation trend in today's marketplace is prominent: the issue that needs to be contemplated from a HRM perspective is its effect on the various functions of HRM The changing nature of mobility worldwide means that the HR function in international organisations has to meet a series of challenges It has to work within globally co-ordinated systems whilst recognising and being sensitive to local needs Practitioners are looking to source talent from increasingly varied places around the world, so integrating a diverse workforce for maximum organisational and individual performance is crucial 61 International HR Planning 62 International Human Resource Management Increasingly the lines between traditional HR functions are blurred, so resourcing specialists have to focus on management development and reward issues as well as resourcing ones The continuing increase in merger and acquisition activity means that HR practitioners are engaged in selection of employees in a changing environment and looking to harmonise HR practices HR is looking to maximise the learning opportunities given by global networks to share best practice Rapidly changing business situations in volatile global markets means that HR must often recruit, deploy and develop people at great speed 3.6.1 Types of International Employees and their Required Competencies HR practitioners responsible for international assignments are no longer simply involved in the management of expatriates As business requirements have changed, longer term expatriation has reduced and, in the global community, people are thinking about various types of international employees These can include: international commuters contract expatriates employees used on long-term business trips assignees on short term or medium term business trips cadres of global managers international transferees (from one subsidiary to another) 'self-initiated movers' (SIMS) who live and work away from their home country virtual international employees active in cross-border project teams domestically based employees dealing with international suppliers and/or clients immigrants attracted to a domestic labour market Looking at this diverse list, the competencies necessary to fulfil these roles will vary significantly In particular, the enlargement of the European Union has brought an influx of employees to the domestic market who have been educated and trained in different systems so there is a very real and immediate challenge facing organisations to understand the vocational education and qualification structures of other countries Research has identified sets of competencies which many organisations use in the recruitment and selection of international employees Typcially, these include aspects such as adaptability, flexibility, conflict resolution skills, questioning and listening skills, cross cultural awareness, communicative ability, influencing skills, emotional maturity, self motivation and resilience Overall, there are two competing resourcing philosophies: The traditional psychometric approach whereby individuals' predicted suitability for assignment is determined by assessment against competencies identified by the organisation as important to effective international management A clinical risk-assessment approach which investigates the individual psychological transitions and adaptations managers will have to undergo and assesses if that person has a suitable psychological profile to cope with these changes There is a growing focus on the idea of global leadership and international mindset which is a broader concept relating to the type of person who will be successful in an international environment This places high value on sharing information, knowledge and experience across national, functional and business boundaries and on balancing the country, business, and functional priorities that emerge as organisations globalise 3.6.2 International Migration and the Impact on Recruitment Recently, there has been a rapid expansion of international mobility and migration, often to fill skills shortages in the domestic market In terms of demand, employers often feel that migrant workers can provide the necessary skills as well as high levels of dependability and commitment In addition to filling gaps in low skilled roles, numbers of applicants to the Highly Skilled Migrant Programme introduced in 2002 have risen Our factsheet on employing overseas workers has more information on various aspects of recruiting of foreign nationals CIPD members can see more information on immigration in our factsheet on immigration law changes The government sees migration as necessary in supporting sustainable economic growth and addressing skill shortages and has embarked on a process of 'managed migration' which has involved legislative changes If HR practitioners are thinking of using workers from overseas as part of their organisation's resourcing strategy, there are a number of factors to consider: Is this a longer-term strategy or a short term solution requiring different approaches? What are the ethical and brand issues associated with an overseas recruitment campaign? How you identify a source of expertise to establish a process to assess the technical competence of migrant workers? How you assess and improve the readiness of the receiving unit to cope with the diversity issues associated with a multicultural workforce? 3.6.3 International Talent Management Identifying, recruiting, deploying and developing talent globally is a key role of the HR practitioner working in a global environment Organisations identify talent management as a key element in a successful people strategy It improves employee engagement and commitment, encourages high performance and improves retention rates Global talent management strategies include advanced development for key roles and high potentials, whilst putting in place learning interventions for employees at all levels to develop an international mindset The HR function can expect to consider the following issues when looking at international talent management: Managing the talent pipeline - employers are trying to recruit 'ahead of the curve' to engage individuals with particular skills and aptitudes, bearing future business needs in mind Developing relationships with universities and business schools to secure future talent from a known resource Using global IT systems to create databases of internal talent pools Creating skilled and competent teams of recruiters in different geographies 63 International HR Planning 64 International Human Resource Management Managing recruitment suppliers on a global basis, introducing speed, cost and quality controls, the use of preferred partners, branding messages and ensuring audit trails to protect against legal issues associated with global diversity Using e-enabled job boards and websites to convey messages about the employer brand worldwide 3.6.4 Local Selection and Assessment Issues Local recruitment is often used because the local market is better known by local managers, it conveys more acceptable messages to the local community and workforce and it reduces the costs of running campaigns from the HQ When business requirements indicate that local recruitment is appropriate, HR business partners need a thorough knowledge of business, legal, fiscal and cultural practices regarding employment in that particular country As far as possible, it is vital to achieve both global business consistency and sensitivity to national custom and practice To ensure consistency in recruiting for corporate values internationally, work needs to be done in adapting psychological and educational tests to different linguistic and cultural contexts Some of the roles, which a business partner can be expected to be involved in are: Investigating local job centres and agencies, how they can be used and building local networks Working with search agencies, from large global agencies to specialised local firms Setting up the necessary legal entities and frameworks for employing people Understanding general frameworks of local employment law, although taking specialist legal advice is always recommended Investigating the local skill level for specialist skills and deciding whether local recruitment can be valid for all levels of jobs Building the local capability to match business needs Developing cross-national advertising strategies, taking into account local media knowledge, sensitivity to cultural values, translation needs, different legislative structures, differing skills and competencies Assessing language competence where this is a requirement of the role 3.6.5 Selection Criteria Personality and psychological tests have been used in the selection process but the effectiveness of such tests as predictors of cultural adjustment is questioned Willis (1984) states that if tests are used they should be selected with care and regard for reliability and validity because, while some tests may be useful in suggesting potential problems, there appears to be little correlation between test scores and performance He further adds that most of the relevant tests have been devised in the United States and, therefore, may be culture-bound Use of such tests without careful modification on non-American nationals adds another question mark to their reliability and validity as predictors of expatriate success The drawback of expatriate selection based on traits or characteristics is the subjective nature of the scoring of abilities, especially those classified as personal and environmental characteristics Nevertheless, models derived from this approach have value in that they provide some guidelines that can be applied during the selection process rather than mere reliance on the potential manager’s domestic record as a predictor One such model is offered by Mendenhall and Oddou (1985) They propose a four-dimensional approach that attempts to link specific behavioural tendencies to problem international performance: The self-oriented dimension reflects the degree to which the expatriate expresses an adaptive concern for self-preservation, self-enjoyment, and mental hygiene The perceptual dimension reflects the expertise the expatriate possesses in accurately understanding why host nationals behave the way they The others-oriented dimension reflects the degree to which the expatriate is concerned about host-national co-workers and desires to affiliate with them The cultural-toughness dimension reflects a mediating variable that recognizes that acculturation is affected by the degree to which the culture of the host country is incongruent with that of the home country The evaluation of the candidate’s strengths and weaknesses on these four dimensions will focus appropriate attention on cross-cultural ability and behaviour thus complementary ability assessment 3.6.6 Development of an Effective Workforce Once an effective workforce has been attracted to the employing organisation, the next phase of human resource management is that of developing an effective workforce This is an on-going, continuous developmental process that reflects the constant changes in the competitive marketplace Specifically, the task of developing an effective workforce entails orientation, training and development, and performance appraisal Orientation When an individual joins an organisation, there is much to be learnt with respect to what should be done, how it is to be done, and so on Socialisation is the process by which the attitudes, expectations, and behaviour of a new member is systematically altered by the organisation The purpose of the socialisation process is to establish the best possible fit between the person and the position in the organisations This problem of socialisation is especially demanding for large complex organisations To facilitate the socialisation is especially demanding for large complex organisations establish a formalised programme to help orient the new employee with respect to the employer Orientation may be defined as an interrelated set of planned activities designed to acquaint the new employee with key aspects of the organisation and the job in question The orientation process usually includes an introduction to the company’s missions, goals, strategies, policies, key officers, work behaviour expectations, and regulations The major benefits that accrue from an effective orientation programme are summarised as follow: Orientation can create in the new employee a favourable impression with respect to the work and the organisation Orientation can help relieve the new employee’s anxiety about the new job and help him or her become comfortable in the position Orientation can help provide critical information concerning about the job and the organisation and, in the process, help the employee develop more realistic job expectations Orientation can save time and effort during the critical learning process and lower start-up costs Orientation can improve new workers’ productivity 65 International HR Planning 66 International Human Resource Management Orientation can reduce turnover and improve employment stability Orientation can reduce conflict caused by uncertainty or inaccurate impressions Orientation can strengthen the organisational culture (Holt; 1993) A good example of how employee orientation pays off for the employer is found at Honda’s Marysville, Ohio plant After an exhaustive selection process, new employees are given extensive orientation into the world of Honda culture The orientation process is designed to give each new employee a “special feeling” with respect to his or her relationship with Honda and the co-workers Hourly employees are called “associates” by Honda management and are orientation to recognise how important each worker is to the company and to the work team Workers are placed in teams that have broad responsibilities, and the orientation process instills a feeling of loyalty to Honda and its objectives (G Burton; 1993) An approach to international management development taken by the Hong Kong and Shanghai Banking Corporation is illustrated in Box 3.3 below Box 3.3: HSBC Career Hong Kong and Shanghai Banking Corporation (HSBC) has a dual career structure for its managers It recruits graduates who specifically choose a career within their own country (residential officers) or who choose an international career (international officers) Both categories of management recruits undergo the same six-month executive development programme, with a combination of technical and interpersonal skills and the opportunity to develop cultural sensitivity and synergy Drawing recruits from all over the world on the same programme, with as many as ten different nationalities living and working together during this initial six months, often provides contacts that last a working lifetime The training programme is divided into four stages The first is an orientation and teambuilding process over a two-day seminar designed to develop cultural awareness This provides the basis for understanding how cultural background shapes individuals’ values, attitudes and behaviour, and the way people from other cultures perceive them The second stage is a ten-day outdoor development course designed to build team skills, cultural understanding and synergy in situations that require trust, participation and interpersonal skills This is held in the Hong Kong New Territories The third stage is a one-week course in interpersonal skills development The fourth stage is an international assignment in order for recruits to gain experience in a branch as well as working in a different culture, reinforcing the learning undertaken in the first three stages The main aim of this is to develop cultural awareness and sensitivity Therefore the approach of HSBC is to expose management trainees at an early stage in their career to cross-cultural differences, which will stand them in good stead for the remainder of their careers, whether they are to work internationally or domestically (Burmham, Oates, 1991) Training and Development Training and development results from a planned organisational effort to help employees to learn and to improve work behaviours Training is most often used to help lower-level or technical workers learn how to the jobs currently fill or are being prepared to fill Development, however, usually relates to the process of teaching professional employees and managers those skills necessary for both current and future assignments Development an Effective Workforce Once an effective workforce has been attracted to the employing organisation, the next phase of human resource management is that of developing this effective workforce This is an on-going, continuous developmental process that reflects the constant changes in the competitive marketplace Specifically, the task of developing an effective workforce entails orientation, training and development, and performance appraisal Management Development Management development programmes are long-term efforts and develop the manager to his or her fullest potential Such development should be considered a life-time process, designed to maximise managerial performance throughout the manager’s career Thus, the nature of the management development programme varies with the stages of both the managerial hierarchy and the managerial career For example, at IBM, employees identified as having ‘high potential’ during the human resource audit are provided with different types of training at three different stages of their career: (1) beginning managers receive basic supervisory training; (2) middle managers receive training with a broader perspective which concentrates on judgemental skills; and (3) top managers receive training at a special advanced management school that emphasises decision-making, negotiating, and strategic skills It is an important to note that there is a whole new leadership training industry emerging, as more and more organisations recognise the need to provide such training to their leaders Today, leadership training is being offered by more than 600 organisations, and the cost varies from $29 for a book on leadership to $65,000 for a speech on the subject (Braham; 1987) Case Study Happy to be Going Home A US family, from the mid-west, was posted to Melbourne, Australia The expatriate’s role was to assist the Australian subsidiary improve its quality control and supplier relationships Chuck was placed in charge of the purchasing department After 12 months, he had successfully established good links with the company’s key component suppliers and was in the process of arranging joint company quality training programmes with these suppliers to ensure the newly-instigated just-in-time inventory procedure was on a sound footing Chuck was enjoying his new role Meanwhile, his 10-yearold daughter was finding it difficult to make friends in the expensive private school the company had arranged for her to attend His wife was also finding life in Australia somewhat hard to cope with “On the surface, it seems so much like home, but Australians are not at all the same as us Americans, and some people make disparaging remarks about us They use terms such as ‘Yanks’ I miss not being able to find familiar things, such as brownie mix, in the supermarket.” Both wife and daughter were very happy when circumstances provide an acceptable reason for an early end to Chuck’s assignment His elderly mother suffered a bad fall, and there were no other family members to take care of her The family was repatriated after 14 months into a 3-years assignment The expatriate was replaced by another PCN QUESTION When Chuck was enjoying his assignment, why was his family unhappy to stay in Australia? 67 International HR Planning 68 International Human Resource Management Check Your Progress What types of task are involved in the development of an effective workforce? 3.7 LET US SUM UP When staffing overseas positions, the multinational corporation (MNC) has three major options: (1) an ethnocentric staffing approach, employing host country nationals; (2) a polycentric staffing approach, employing home country nationals; and (3) a geocentric staffing approach, employing third country nationals Host country nationals comprise the local workforce that can be hired by the international firm Home country nationals are those from the corporation’s home country Third country nationals are citizens from nations other than the host country nationals in developed countries The major underlying objective of human resource planning is to lay the foundation from which the organisation will always have the right people in the right places to the work required by the organisation Human resource forecasting is the process by which an organisation estimates its future human resource needs Once an organisation has estimated its future demand and supply of human resource, the next step in the staffing process is to match the two forecast to identify areas of future overstaffing and areas of future manpower shortages In order to be certain the recruitment process follows prescribed guidelines; organisations may establish recruitment; policies Recruitment can be categorised into two types: (1) external recruitment; and (2) internal recruitment One technique of the recruitment process is known as the realistic job preview (RJP), by which every candidate is given all the pertinent and realistic information about both the job and organisation Ideal selection identifies the best fit between the person and the job There are seven basic factors in the selection process: (1) application forms; (2) interviewing; (3) assessment centres; (4) employment testing; (5) reference checks; (6) physical examinations; and (7) selection validation There are three basic sources the MNCs can tap for overseas positions: (1) home or parent country nationals (PCNs); (2) host country nationals (HCNs); and (3) third country nationals (TCNs) The four approaches to multinational staffing decisions—ethnocentric, polycentric, geocentric, and regiocentric— tend to reflect the managerial philosophy towards international operations held by top management at headquarters Personality and psychological tests have been used in the selection process but the effectiveness of such tests as predictors of cultural adjustment is questioned Willis (1984) states that if tests are used they should be selected with care and regard for reliability and validity Once an effective workforce has been attracted to the employing organisation, the next phase of human resource management is that of developing an effective workforce This is an on-going, continuous developmental process that reflects the constant changes in the competitive marketplace Specifically, the task of developing an effective workforce entails orientation, training and development, and performance appraisal 3.8 LESSON END ACTIVITY Identify the key issues and challenges facing multinationals in developing a cadre of global managers 3.9 KEYWORDS Human Resource Planning: The process of getting the right number of qualified people into the right job at the right time, so that an organisation can meet its objectives Job Analysis: It is the systematic study of job requirements and those factors that influence the performance of those job requirements Human Resource Forecasting: The process by which an organisation estimates its future human resource needs Recruitment: The process by which an organisation attracts people to apply for their job openings Realistic Job Preview: A recruitment technique by which every candidate is given all the pertinent and realistic information about both the job and organisation Selection: The process by which the organisation choose from among the applicants, those people who are perceived the best meet the job requirements 3.10 QUESTIONS FOR DISCUSSION What steps are needed to attract an effective workforce for an MNC? How should an organisation develop an effective workforce? What are the sources of an MNC can tap for its overseas position? What are the approaches to Multinationals’ staffing decisions? What are the factors involved in expatriate selection, both in terms of individual and specifics of situation? Check Your Progress: Model Answers CYP 1 External recruitment is conducted in four steps: (i) planning, (ii) strategy development, (iii) searching, and (iv) programme evaluation There are seven basic factors in the selection process: (i) application forms, (ii) interviewing, (iii) assessment centre, (iv) employment testing, (v) reference check, (vi) physical examination and (vii) selection validation CYP The task of developing an effecting work-force entails orientation, training and development, and performance appraisal 3.11 SUGGESTED READINGS P L Rao, International Human Resource Management, Excel Books, New Delhi, 2008 Briscoi, Schuler and Claus, International Human Resource Management, Routledge, 2008 Breuester, Sparrow and Vernon, International Human Resource Management (3rd edition) P J Dowling and D.E Welch, International Human Resource Management, Thomson, London, 2004 69 International HR Planning ... Rao, International Human Resource Management, Excel Books, New Delhi, 2008 Briscoi, Schuler and Claus, International Human Resource Management, Routledge, 2008 Breuester, Sparrow and Vernon, International. .. AND SELECTION 3.3.1 Human Resource Forecasting Human resource forecasting is the process by which an organisation estimates its future human resource needs The process of human resource forecasting... Sparrow and Vernon, International Human Resource Management (3rd edition) P J Dowling and D.E Welch, International Human Resource Management, Thomson, London, 2004 69 International HR Planning