International Human Resource Management-A learning Resource

International Human ResourcesManagement(IHRM) Issues-A learning ResourceJayadeva de Silva.M.Sc ,FIPM ,FITDObjectivesAfter following this lesson, you should be able to: Identify the types of organizational forms used for competing internationally. Explain the economic, political-legal, and cultural factors in different countries that HR managers need to consider. Explain how domestic and international HRM differ. Discuss the staffing process for individuals working internationally. Identify the unique training needs for international assignees and their employees. 1

 Identify the characteristics of a good international compensation plan. Reconcile the difficulties of home- and host-country performance appraisals. Explain how labor relations differ around the world.Increasing Importance of Global Human ResourceUnderstanding Managing Across BordersTypes of Corporations • International corporation  Domestic firm that uses its existing capabilities to move into overseas markets. • Multinational corporation (MNC)  Firm with independent business units operating in multiple countries. • Global corporation  Firm that has integrated worldwide operations through a centralized home office. • Transnational corporation  Firm that attempts to balance local responsiveness and global scale via a network of specialized operating units.How International Companies Affect the World Economy 2

o Their production and distribution extend beyond national boundaries, making it easier to transfer technology.o They have direct investments in many countries, affecting the balance of payments.o They have a political impact that leads to cooperation among countries and to the breaking down of barriers of nationalism.How Does the Global Environment Influence Management?Unified EconomiesClosely partnered nations such as the European Union (EU) havedeveloped 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 isconducted in that country.Cultural Environment of International Business 3

Domestic versus International HRMIssues in international HRM in helping employees adapt to a new anddifferent environment outside their own country:RelocationOrientationObjectiveTranslation servicesInternational StaffingExpatriates, or Home-country NationalsEmployees from the home country who are on internationalassignment.Host-country NationalsEmployees who are natives of the host country.Third-country NationalsEmployees who are natives of a country other than the homecountry or the host country.Changes in International Staffing over TimeHiring Host-Country Nationals 4

Three main advantages:Hiring local citizens is generally less costly than relocatingexpatriates.Since local governments usually want good jobs for their citizens,foreign employers may be required to hire locally.Most customers want to do business with companies they perceiveto be local versus foreign.Recruiting InternationallyWork Permit, or VisaGovernment document granting a foreign individual the right toseek employment.Guest WorkersForeign workers invited to perform needed labor.ApprenticeshipsVocational training programs in skilled trades.Transnational TeamsTeams composed of members of multiple nationalities working onprojects that span multiple countries.Selecting Global ManagersGlobal managerA manager equipped to run an international businessSkills CategoriesAbility to seize strategic opportunitiesAbility to manage highly decentralized organizationsAwareness of global issuesSensitivity to issues of diversityCompetence in interpersonal relationsSkill in building communitySelecting Global Managers•Begin with self-selection.•Create a candidate pool.•Assess core skills. 5

•Assess augmented skills and attributes.Measured Expatriate CharacteristicsCore SkillsSkills that are considered critical to an employee’s success abroad.Augmented SkillsSkills that are helpful in facilitating the efforts ofexpatriate managers.Failure ratePercentage of expatriates who do not perform satisfactorily.Comparison of Advantages in Sources of Overseas ManagersHost Country Home country Third countryLess costly Talent available within company Broad experiencePreferred byhost-country Greater control International outlookIntimate knowledge of Company experience Multilingualismenvironment and cultureLanguage facility Mobility Experience provided to Corporate xecutivesExpatriate Selection CriteriaCauses of Expatriate Assignment Failure 6

• Family adjustment • Lifestyle issues • Work adjustment • Bad selection • Poor performance • Other opportunities arise • Business reasons • Repatriation issuesTraining and DevelopmentEssential training program content to prepare employees for workinginternationally:Language trainingCultural trainingAssessing and tracking career developmentManaging personal and family lifeRepatriationCulture shockPerpetual stress experienced by people who settle overseas.Preparing for an International AssignmentTo prepare for an international assignment, one should becomeacquainted with the following aspects of the host country: 1. Social and business etiquette 2. History and folklore 3. Current affairs, including relations between the host country and the United States 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 7

10 The LanguageTraining Methodso Reviewing available information about the host company: books, magazines, video tapes.o Conversations with host country natives.o Sensitivity training to become familiar with the customs and overcome prejudices.o Temporary assignments to encourage shared learning.A Synthesis of Country ClustersReturning from an Overseas AssignmentRepatriation 8

The process of an employee transitioning home from aninternational assignment.Throw a “welcome home” party.Offer counseling to ease the transition.Arrange conferences and presentations to make certain thatknowledge and skills acquired away from home are identified anddisseminated.Get feedback from the employee and the family about how well theorganization handled the repatriation process.CompensationDifferent countries have different norms for employeecompensation.Financial (money) incentives versus nonfinancial incentives(prestige, independence, and influence)Individual rewards versus collectivist concerns for internal equityand 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 theorganization but provides enough flexibility to customize particularpolicies and programs to meet the needs of employees in specificlocations.Forces Driving Global PayCULTURAL PREFERENCESImportance of statusRole of individual vs. organization vs. governmentEquality vs. disparityAchievement vs. relationshipsECONOMIC CONDITIONSSize of economyTypes of industries, natural resourcesInflation, unemploymentProtectionism vs. open market 9

PERSONAL PREFERENCESAttitudes toward riskQuality of life vs. workShort- vs. long-termCompetitiveness vs. solidaritySOCIAL CONSTRAINTSIncome tax rates, social costsLaws and regulationsCollective bargaining, worker participationSkills, education of workforceCompensation of Host-Country Employeeso Hourly wages vary dramatically from country to country.o Pay periods are different.o Seniority may be an important factor.o High pay rates can upset local compensation practices.o Bonuses, profit-sharing, benefits and paid leave may be more extensive and legally required.Hourly Wages in Different Countries* in US DollarsNorway 31.55Germany (former West) 31.25Switzerland 27.87Belgium 27.73Sweden 25.18United States 21.97France 21.13Britain 20.37Japan 20.09Australia 20.05Canada 19.28Italy 18.35Spain 14.96Israel 11.73 10

Korea 10.28Portugal 6.23Taiwan 5.84Brazil 2.67Mexico 2.48China 0.63Sri Lanka 0.49Compensation of Expatriate Managerso Provide an incentive to leave the United Stateso Allow for maintaining a U.S. standard of livingo Provide for security in countries that are politically unstable or present personal dangerso Include provisions for good healthcareo Provide for the education of childreno Consider foreign taxes the employee is likely to have to pay (in addition to domestic taxes) and help with tax forms and filingo Allow for maintaining relationships with family, friends, and business associates.o Facilitate reentry homeo Be in writingExpatriate Compensation SystemsHome-Based PayPay based on an expatriate’s home country’s compensationpracticesBalance-Sheet ApproachA compensation system designed to match the purchasing power ina person’s home countryCalculate base payFigure cost-of-living allowance (COLA)Add incentive premiumsAdd assistance programs 11

Expatriate Compensation Systems (cont’d)Host-Based PayExpatriate pay comparable to that earned by employees in a hostcountry to which the expatriate is assigned.LocalizationAdapting pay and other compensation benefits to match that of aparticular countryOther IssuesAdequacy of medical carePersonal securityEducationPerformance Appraisal of International ManagersWho Should Appraise Performance?Home-country evaluationsHost-country evaluationsAdjusting Performance CriteriaAugmenting job dutiesIndividual learningOrganizational learningProviding FeedbackDebriefing interviewBoosting ROI of ExpatriatesMajor initiatives planned to improve assignment return oninvestment (ROI):Better candidate selection 32%Career-planning skills 26Communicating objectives 24Assignment preparation 20Monitoring program 17Cross-cultural training 10Developing or expanding intranet 7Communication/recognition 6Web-based cultural training 5Mandating destination support 4 12

Other 17International Organizations and Labor RelationsInternational Differences in UnionsThe level at which bargaining takes place (national, industry, orworkplace)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.Key Terms augmented skills balance-sheet approach codetermination core skills cultural environment culture shock expatriates, or home-country nationals failure rate global corporation global manager guest workers home-based pay host-based pay host country host-country nationals international corporation localization multinational corporation (MNC) repatriation third-country nationals transnational corporation transnational teams work permit, or visa 13

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International Human Resource Management-A learning Resource

by Humantalents on Apr 07, 2011

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