HUman resource managemenr 2e s keiman chapter14

Atomic Dog is a trademark used herein under license.. Atomic Dog is a trademark used herein under license.. All rights reserved.14-1b Linking HRM Practices to Foreign Competitive Advanta

Chapter 14

Establishing HRM Practices

in Foreign Countries

© 2010 Cengage Learning. Atomic Dog is a trademark used herein under license All rights reserved.

Chapter Outline

14-1a Opening Case: Losing Competitive Advantage at General Electric

• Problem: Trying to “Americanize” a newly purchased

French firm.

 $25 million loss in its first year, instead of gaining $25 million as projected

 Cost-cutting measures including massive layoffs and closing of plants

 Shrink in workforce from 6,500 to 5,000, as managers

© 2010 Cengage Learning. Atomic Dog is a trademark used herein under license All rights reserved.

14-1b Linking HRM Practices to Foreign Competitive Advantage

• International business operations appear in a variety

of forms.

 Wholly owned subsidiaries: The most common way to

‘‘go international’’ by setting up foreign operations that they own

 Joint venture: Firms may join up with foreign firms to create a new company Joint ventures have

mushroomed for two reasons:

- Local laws of some countries do not allow subsidiaries

to be wholly owned by foreign companies

- Joint ventures allow companies to draw on others’

expertise.

14-1b Linking HRM Practices to Foreign Competitive Advantage (cont.)

• Impact of International HRM practices on employee

motivation, satisfaction, and performance

 Failure to adjust to the foreign cultural environment is the key reason why expatriates often fail to succeed

 Inappropriate HRM practices can profoundly affect the motivation, satisfaction, and performance of foreign and expatriate employees

 Companies need to properly select, train, manage,

compensate, and develop employees to work in cultural environments

cross-© 2010 Cengage Learning. Atomic Dog is a trademark used herein under license All rights reserved.

14-2a Understanding Cultural Differences

• Culture: A society’s set of assumptions, values, and

rules about social interaction.

• Artifacts: Tangible things that represent the

superficial aspects of a country’s culture.

• Values: Rules of societal propriety and impropriety

that are shared by people within a culture.

• Assumptions: A society’s beliefs that have evolved

from its attempts to adjust to the world around it.

14-2a Understanding Cultural Differences (cont.)

• How people react to cultural improprieties

 When cultural rules are violated, the “guilty party” is often condemned or punished in some manner

 Degree of condemnation depends on two factors:

- The extent to which the broken rule is widely shared

among a cultural group’s members.

- The extent to which the rule is deeply held and viewed

as being important or sacred.

 When working with people from other cultures, one must attempt to learn the rules of that culture and abide by them

14-2b The Use of Expatriates

 Managers must understand many international

aspects of business; they learn this through a world foreign experience

real- By overseeing foreign operations, managers can help ensure that operations are congruent with corporate strategy and policy

 Expatriates can communicate subsidiaries’ needs and concerns to corporate headquarters in a timely and effective manner

 Effective expatriate managers can communicate their useful market knowledge to corporate managers

14-2b The Use of Expatriates (cont.)

• Expatriate rights under the Civil Rights Act of 1991:

 Provides coverage to U.S citizens employed in a

foreign country, provided that compliance with this provision would not cause the employer to violate the law of the foreign country

 The U.S citizen must be employed overseas by a firm controlled by an American employer

 Control can be determined through interrelation of

operations, common management, centralized control

of labor relations, and common ownership or financial control of the corporation and the employer

© 2010 Cengage Learning. Atomic Dog is a trademark used herein under license All rights reserved.

14-2b The Use of Expatriates (cont.)

• Selecting expatriates

 Most companies place too much emphasis on

technical skills, and too little emphasis on personality

 Personality traits often play a larger role in an

employee’s success at adapting to a new culture

 Personality traits that a successful expatriate should possess:

- Ability to handle stress.

- Reinforcement substitution

- Ability to develop relationships.

- Perceptual skills.

14-2b The Use of Expatriates (cont.)

• Reinforcement substitution: The ability to find

substitutes for pleasurable pursuits that are

unavailable in a new culture.

• Ability to develop relationships: Two skills are

associated with expatriates developing relationships with host nationals:

 Willing to communicate in the host language

 Conversational currency: An expatriate inserts social and cultural tidbits and trivia into conversations with host-national employees

© 2010 Cengage Learning. Atomic Dog is a trademark used herein under license All rights reserved.

14-2b The Use of Expatriates (cont.)

• Perceptual skills

 Flexibility of one’s belief systems

 Ability to avoid being judgmental about the belief and value systems of the host culture

 Ability to make flexible attributions about why host nationals behave the way they do

 High tolerance for uncertainty

14-2b The Use of Expatriates (cont.)

• Training expatriates: They should be taught to:

 Understand and work effectively with people from different cultural, religious, and ethnic backgrounds

 Manage multicultural teams

 Understand global markets, global customers, global suppliers, and global competitors

© 2010 Cengage Learning. Atomic Dog is a trademark used herein under license All rights reserved.

14-2b The Use of Expatriates (cont.)

• Problems appraising expatriates’ job performance

 Invalid performance criteria

- Performance criteria are often superimposed onto an expatriate manager even though those criteria might not make sense in the foreign culture.

- Companies must construct criteria according to each

subsidiary’s unique situation.

 Rater competence

- Raters may lack an understanding of the social and

business contexts in which the work is performed, increasing rating errors.

 Rater bias

- Misinterpretations of behavior due to cultural differences.

14-2b The Use of Expatriates (cont.)

 Utilize multiple raters

 Make sure that some of those raters have lived and worked in the country in which the expatriate is

working

© 2010 Cengage Learning. Atomic Dog is a trademark used herein under license All rights reserved.

14-2b The Use of Expatriates (cont.)

 Taxes

14-2b The Use of Expatriates (cont.)

• Repatriates: Expatriates who return home.

 Not told what their job assignments will be prior to returning home

 Expatriates return home to jobs that require less autonomy and authority

 Difficulty readjusting to their native culture

 Loss of premiums

© 2010 Cengage Learning. Atomic Dog is a trademark used herein under license All rights reserved.

14-2b The Use of Expatriates (cont.)

• HRM interventions for expatriates

 Mentoring

- Keep track of the expatriate’s performance.

- Keep expatriates updated about happenings in the

parent company.

- Help the repatriate find a job in the parent company that

would make use of their international expertise.

 Formalized career planning

- Integrate overseas assignments into their succession

planning systems.

 Communication systems

- Encourage a flow of information between expatriate

managers and parent company managers.

14-2c Developing HRM Practices in National Countries

Host-• Adjust HRM practices to the norms and culture of the

host country.

• Develop training programs after considering how the

culture views the educational process.

what motivates employees in each culture.

© 2010 Cengage Learning. Atomic Dog is a trademark used herein under license All rights reserved.

14-3a International HRM Issues

and the Manager’s Job

 Managers must successfully navigate “long-distance managing” which is a complex and difficult task

• Expatriate service

 A manager must be able to adapt his or her

management behavior to the culture of the host country

14-3b How the HRM Department Can Help

 Who should be sent overseas?

 What kind of training will they need?

 What kind of compensation package will be needed to induce candidates to go overseas?

 In what ways do the company’s HR policies and

procedures need to be adjusted overseas due to different legal issues and cultural norms?

 How do performance appraisal systems need to be

modified?

 How may global management development programs

© 2010 Cengage Learning. Atomic Dog is a trademark used herein under license All rights reserved.

14-3c HRM Skill-Building for Managers

 By not observing/following proper cultural proprieties, you will considered as not being well-mannered and may lose the business deal

14-3c HRM Skill-Building for Managers

(cont.)

 Most Mexican firms have a bureaucratic structure with power vested at the top

 Workers prefer that their managers keep a formal,

somewhat distant relationship with them

 Mexicans frown upon such practices as employee

empowerment, open communication channels, and employee ownership

 Mexicans value harmony and have a low tolerance for adversarial relations

 Obedience and respect are more important than

independence and confrontation