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;...

9e 

By Charles W.L Hill

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

What Is The Strategic Role Of 

HRM In International Firms?

The Role of Human Resources in Shaping Organizational Architecture

 Staffing policy - the selection of employees

who have the skills required to perform a

particular job

 Three main approaches to staffing policy

1 The ethnocentric approach - fill key management

positions with parent-country nationals

2 The polycentric approach recruit host country

nationals to manage subsidiaries in their own country, and parent country nationals for positions

at headquarters

3 The geocentric approach seek the best people,

regardless of nationality for key jobs

Which Staffing 

Policy Is Best?

Comparison of Staffing Approaches

 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

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

Expatriate Failure?

 Firms can reduce expatriate failure through improved

selection procedures

 Four dimensions that predict expatriate success are

1 Self-orientation - the expatriate's esteem,

self-confidence, and mental well-being

2 Others-orientation - the ability to interact effectively with

host-country nationals

3 Perceptual ability - the ability to understand why people

of other countries behave the way they do

4 Cultural toughness – the ability to adjust to the posting

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

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

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

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

What Are The Key Issues In 

Compensating Expatriates?

 Two key issues on compensation

1 How to adjust compensation to reflect

differences in economic circumstances

and compensation practices

 there are substantial differences in executive

compensation across countries

1 How to pay expatriate managers

 most firms use the balance sheet approach

Compensating Expatriates?

 A compensation package has five components

1 Base salary - normally in the same range as the base

salary for a similar position in the home country

2 Foreign service premium - extra pay the expatriate

receives for working outside his country of origin

3 Various allowances - hardship, housing, cost-of-living,

education

4 Tax differentials - may have to pay income tax to both

the home country and the host-country governments

no reciprocal tax treaty exists

5 Benefits – many firms provide the same level of

medical and pension benefits abroad that employees

receive at home

Why Are International Labor 

Relations Important?

 Organized labor is concerned that

1 Multinationals can counter union bargaining power

by threatening to move production to another country

2 Multinationals will farm out only low-skilled jobs to

foreign plants making it easier to switch production locations

3 Multinationals will import employment practices and

contractual agreements from their home countries and reduce the influence of unions

Relations Important?

 Organized labor has responded to the

increased bargaining power of multinational

corporations by

1 Trying to set-up their own international organizations

2 Lobbying for national legislation to restrict

multinationals

3 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