HRM 5th chapter 15 international human resources management

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Canada Limited. PowerPoint Presentation by

Managing Human Resources

International Human

Resources Management

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After studying this chapter, you should be able to:

1 Identify the types of organizational forms used for

competing internationally

2 Explain the economic, political-legal, and cultural

factors in different countries that HR managers

need to consider

3 Explain how domestic and international HRM differ

4 Discuss the staffing process for individuals working

internationally

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division of Thomson Canada

After studying this chapter, you should be able to:

6 Identify the characteristics of a good international

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Increasing Importance of Global Human Resource Understanding

International Mergers and Acquisitions

Importance of Global Human Resources Management

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Managing Across Borders

business units operating in

multiple countries.

• Global corporation

worldwide operations through a centralized home office.

• Transnational corporation

balance local responsiveness and global scale via a network of

specialized operating units.

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Types of Organizations

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Top International Companies

7 Johnson & Johnson 161.36

8 Royal Dutch/Shell Group 158.48

MARKET VALUE (BILLIONS OF U.S DOLLARS)

Figure 15.2

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Top International Companies (cont’d)

SALES (BILLIONS OF U.S DOLLARS)

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Top International Companies (cont’d)

PROFITS (BILLIONS OF U.S DOLLARS)

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How International Companies Affect the

World Economy

• Their production and distribution extend beyond

national boundaries, making it easier to transfer technology.

• They have direct investments in many countries,

affecting the balance of payments.

• They have a political impact that leads to

cooperation among countries and to the

breaking down of barriers of nationalism.

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How Does the Global Environment

Influence Management?

• Unified Economies

Closely partnered nations such as the European

Union (EU) have developed into strong competitors

Promotes job growth in trading nations.

• Cultural environment

The communication patterns, religion, values and

ideologies, education, and social structure of a host country influence how HR is conducted in that

country

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The Nations of the

European Union

The Nations of the

European Union

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Cultural Environment of International Business

Figure 15.3

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Domestic versus International HRM

• Issues in international HRM in helping

employees adapt to a new and different environment outside their own country:

Relocation

Orientation

Objective

Translation services

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International Staffing

• Expatriates, or Home-country Nationals

Employees from the home country who are on

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Changes in International Staffing over Time

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Hiring Host-Country Nationals

• Three main advantages:

1 Hiring local citizens is generally less costly than

relocating expatriates

2 Since local governments usually want good jobs for their citizens, foreign employers may be required to hire locally

3 Most customers want to do business with

companies they perceive to be local versus foreign

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Recruiting Internationally

• Work Permit, or Visa

Government document granting a foreign individual

the right to seek employment

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Selecting Global Managers

• Global manager

 A manager equipped to run an international business

• Skills Categories

Ability to seize strategic opportunities

Ability to manage highly decentralized organizationsAwareness of global issues

Sensitivity to issues of diversity

Competence in interpersonal relations

Skill in building community

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Selecting Global Managers

1 Begin with self-selection.

2 Create a candidate pool.

3 Assess core skills.

4 Assess augmented skills and attributes.

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Highlights in HRM

Skills of Expatriate Managers

Decision making Negotiation skills

Resourcefulness Strategic thinking

Adaptability Delegation skills

Cultural sensitivity Change management

Team building

Maturity

Highlights 15.4

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Measured Expatriate Characteristics

Skills that are helpful in

facilitating the efforts of

expatriate managers

• Failure rate

Percentage of expatriates who

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Comparison of Advantages in Sources of Overseas Managers

HOST-COUNTRY HOME-COUNTRY NATIONALS THIRD-COUNTRY

Less costly Talent available within company Broad experience

Preferred by host-country Greater control International

outlook governments

Intimate knowledge of Company experience Multilingualism

environment and culture

Language facility Mobility

Experience provided to corporate executives

Figure 15.6

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Expatriate Selection Criteria

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Causes of Expatriate Assignment Failure

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Training and Development

• Essential training program content to prepare

employees for working internationally:

Language training

Cultural training

Assessing and tracking career development

Managing personal and family life

Repatriation

• Culture shock

Perpetual stress experienced by people who settle

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Preparing for an International Assignment

1 Social and business etiquette

2 History and folklore

3 Current affairs, including relations between the host country

and Canada

4 Cultural values and priorities

5 Geography, especially its major cities

6 Sources of pride and great achievements of the culture

7 Religion and the role of religion in daily life

8 Political structure and current players

9 Practical matters such as currency, transportation, time zones,

hours of business

10 The language

To prepare for an international assignment, one should become

acquainted with the following aspects of the host country:

Figure 15.9

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Training Methods

• Reviewing available information about the host

company: books, magazines, video tapes.

• Conversations with host country natives.

• Sensitivity training to become familiar with the

customs and overcome prejudices.

• Temporary assignments to encourage shared

learning.

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Assignment acceptance Unrealistic evaluation of stressors to come.

Hurried time frame.

Stressor reevaluation.

Feelings of lack of fit and differential treatment.

Ambiguity owing to inability to decipher meaning of situations.

Bothered by living with a cultural paradox.

Sense of isolation.

Loss of autonomy.

Source: J Sanchez, P Spector, and C Cooper, “Adapting to a Boundaryless World: A Developmental

Highlights 15.5

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Returning from an Overseas Assignment

• Repatriation

The process of an employee transitioning home from

an international assignment

that knowledge and skills acquired away from home are identified and disseminated.

how well the organization handled the repatriation

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Financial (money) incentives versus nonfinancial

incentives (prestige, independence, and influence)

Individual rewards versus collectivist concerns for

internal equity and personal needs

General rule: match the rewards to the values of the local culture—create a pay plan that supports the overall strategic intent of the organization but

provides enough flexibility to customize particular policies and programs to meet the needs of

employees in specific locations

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Forces Driving Global Pay

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Compensation of Host-Country Employees

• Hourly wages vary dramatically from country to

country.

• Pay periods are different.

• Seniority may be an important factor.

• High pay rates can upset local compensation

practices.

• Bonuses, profit-sharing, benefits and paid leave

may be more extensive and legally required.

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31.25 Switzerland 27.87

Belgium 27.73 Sweden 25.18 United States 21.97

France 21.13 Britain 20.37 Japan 20.09 Australia 20.05 Canada 19.28 Italy 18.35 Spain 14.96 Israel 11.73 Korea 10.28

COUNTRY

$/HOUR

*Hourly compensation costs in U.S dollars

for production workers in manufacturing.

Source: U.S Department of Labor, Bureau of Labor Statistics, November

2004.

Figure 15.12

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Compensation of Expatriate Managers

• Provide an incentive to

leave Canada

• Allow for maintaining a

N.A standard of living

• Provide for security in

countries that are

politically unstable or

present personal dangers

• Include provisions for

good healthcare

• Provide for the education

of children

• Consider foreign taxes the

employee is likely to have

to pay (in addition to domestic taxes) and help with tax forms and filing

• Allow for maintaining

relationships with family, friends, and business

associates

• Facilitate reentry home

• Be in writing

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Expatriate Compensation Systems

• Home-Based Pay

 Pay based on an expatriate’s home country’s

compensation practices

• Balance-Sheet Approach

 A compensation system designed to match the

purchasing power in a person’s home country

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Expatriate Compensation Systems (cont’d)

• Host-Based Pay

Expatriate pay comparable to that earned by

employees in a host country to which the expatriate is assigned

• Localization

Adapting pay and other compensation benefits to

match that of a particular country

• Other Issues

Adequacy of medical care

Personal security

Education

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Performance Appraisal of International Managers

• Who Should Appraise Performance?

Home-country evaluations

Host-country evaluations

• Adjusting Performance Criteria

Augmenting job duties

Individual learning

Organizational learning

• Providing Feedback

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Boosting ROI of Expatriates

Major initiatives planned to improve assignment

return on investment (ROI):

Better candidate selection 32%

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International Organizations and Labour

Relations

• International Differences in Unions

The level at which bargaining takes place (national,

industry, or workplace)

The degree of centralization of union-management

relations

The scope of bargaining (parties and issues)

The degree to which government intervenes

The degree of unionization and union strength.

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