BA 105 HRM Chapter 15

1. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.
Chapter 15
Managing Human
Resources Globally

2. ©McGraw-Hill Education
Learning Objectives
LO 15-1 Identify the recent changes that have caused
companies to expand into international markets.
LO 15-2 Discuss the four factors that most strongly
influence HRM in international markets.
LO 15-3 List the different categories of international
employees.
LO 15-4 Identify the four levels of global participation and
the HRM issues faced within each level.
LO 15-5 Discuss the ways companies attempt to select,
train, compensate, and reintegrate expatriate
managers.

3. ©McGraw-Hill Education
Introduction
Trend in Global Expansion
• New markets = new customers
• Moving production facilities may lower labor costs
• Information technology

4. ©McGraw-Hill Education
Current Global Changes 1 of 4
European Union
• European Economic Community (EEC) 1992
• Confederation of most of the European nations that agree
to engage in free trade with one another, with commerce
regulated by an overseeing body called the European
Commission (EC)
• Shared currency (Euro)
LO 15-1

5. ©McGraw-Hill Education
Current Global Changes 2 of 4
North American Free Trade Agreement (NAFTA)
• Canada, United States, and Mexico
• Increased U.S. investment in Mexico
• Many low-skilled jobs went south
• Increased employment opportunities for Americans with
higher-level skills

6. ©McGraw-Hill Education
Current Global Changes 3 of 4
The Growth of Asia
• Singapore, Hong Kong, Malaysia have become
significant economic forces
• China
• Population of more than 1 billion
• Opening markets to foreign investors
• Predicted to have larger economy than U.S.

7. ©McGraw-Hill Education
Current Global Changes 4 of 4
General Agreement on Tariffs and Trade
• Reduce trade barriers globally
• More than 100 member-nations
• World Trade Organization (WTO)

8. ©McGraw-Hill Education
Figure 15.1 Factors Affecting Human Resource
Management in International Markets

9. ©McGraw-Hill Education
Factors Affecting HRM in Global Markets 1 of 6
Culture
• Most important factor
• Often determines the other three factors affecting
HRM in global markets
• Often determines the effectiveness of various
HRM practices
LO 15-2

10. ©McGraw-Hill Education
Factors Affecting HRM in Global Markets 2 of 6
Culture continued
• Hofstede’s Cultural Dimensions
• Individualism-collectivism
• Power distance
• Uncertainty avoidance
• Masculinity-femininity
• Long-term – short-term

11. ©McGraw-Hill Education
Factors Affecting HRM in Global Markets 3 of 6
Culture continued
• Implications of Culture for HRM
• Has a profound impact on a country’s economic health
by promoting certain values that either aid or inhibit
economic growth
• Influences the ways managers behave in relation to
subordinates
• May influence the appropriateness of HRM practices
• Influences how employees value certain aspects of their
work environment
• Influences compensation systems and communication
processes

12. ©McGraw-Hill Education
Factors Affecting HRM in Global Markets 4 of 6
Education-Human Capital
• Educational opportunities
• Countries with low human capital attract facilities
that require low skills and low wage levels
• Countries with high human capital are attractive
sites for direct foreign investment that creates
high-skill jobs

13. ©McGraw-Hill Education
Factors Affecting HRM in Global Markets 5 of 6
Political-Legal System
• Often dictates the requirements for certain HRM
practices, such as training, compensation, hiring,
firing, and layoffs
• Outgrowth of the culture/societal norms of a
country

14. ©McGraw-Hill Education
Factors Affecting HRM in Global Markets 6 of 6
Economic System
• Socialist system
• Education is free, but little economic incentive
• Higher taxes
• Capitalist system
• Cost to develop human capital is higher
• Can reap monetary rewards
• Developing countries
• Low labor costs

15. ©McGraw-Hill Education
Figure 15.2
Hourly
Compensation
Costs in
Manufacturing,
U.S. Dollars,
2012
Jump to long description in appendix

16. ©McGraw-Hill Education
Managing Employees in a Global Context 1 of 9
Types of International Employees
• Types of countries
• Parent countries
• Host countries
• Third countries
LO 15-3

17. ©McGraw-Hill Education
Managing Employees in a Global Context 2 of 9
Types of International Employees continued
• Types of employees
• Expatriate
• Parent-country nationals
• Host country nationals
• Third-country nationals

18. ©McGraw-Hill Education
Managing Employees in a Global Context 3 of 9
Levels of Global Participation
• Domestic
• International
• Multinational
• Global
LO 15-4

19. ©McGraw-Hill Education
Managing Employees in a Global Context 4 of 9
Levels of Global Participation continued
• Transnational HRM
• Transnational scope
• Transnational representation
• Transnational process

20. ©McGraw-Hill Education
Managing Employees in a Global Context 5 of 9
Managing Expatriates in Global Markets
• Average one-time cost for relocating an expatriate
is $60,000
• Average compensation package is approximately
$250,000
• Cost of an unsuccessful expatriate assignment
(that is, a manager returning early) is
approximately $100,000
LO 15-5

21. ©McGraw-Hill Education
Managing Employees in a Global Context 6 of 9
Managing Expatriates in Global Markets continued
• Selection of expatriate managers
• Technical competence in area of operations
• Adaptability
• Cultural sensitivity
• Self dimension
• Relationship dimension
• Perception dimension
• Cultural intelligence

22. ©McGraw-Hill Education
Table 15.3 Select Topics for Assessing
Candidates for Overseas Assignments 1 of 7
Motivation
• What are the candidate’s reasons and degree of
interest in wanting an overseas assignment?
• Does the candidate have a realistic understanding
of what is required in working and living overseas?
• What is the spouse’s attitude toward an overseas
assignment?

23. ©McGraw-Hill Education
Table 15.3 Select Topics for Assessing
Candidates for Overseas Assignments 2 of 7
Health
• Are there any health issues with the candidate or
family members that might impact the success of
the overseas assignment?
Language ability
• Does the candidate have the potential to learn a
new language?
• Does the candidate’s spouse have the ability to
learn a new language?

24. ©McGraw-Hill Education
Table 15.3 Select Topics for Assessing
Candidates for Overseas Assignments 3 of 7
Family considerations
• How many moves has the family made among different
cities or parts of the United States? What problems were
encountered?
• What is the spouse’s goal in this move overseas?
• How many children are in the family, and what are their
ages? Will all the children move as part of the overseas
assignment?
• Has divorce or its potential, or the death of a family
member, had a negative effect on the family’s
cohesiveness?
• Are there any adjustment problems the candidate would
expect, should the family move overseas?

25. ©McGraw-Hill Education
Table 15.3 Select Topics for Assessing
Candidates for Overseas Assignments 4 of 7
Resourcefulness and initiative
• Is the candidate independent and capable of standing by his or
her decisions?
• Is the candidate able to meet objectives and produce positive
results with whatever human resources and facilities are
available regardless of challenges that might arise in a foreign
business environment?
• Can the candidate operate without a clear definition of
responsibility and authority?
• Will the candidate be able to explain the goals of the company
and its mission to local managers and workers?
• Does the candidate possess sufficient self-discipline and self-
confidence to handle complex problems?
• Can the candidate operate effectively in a foreign country without
normal communications and supporting services?

26. ©McGraw-Hill Education
Table 15.3 Select Topics for Assessing
Candidates for Overseas Assignments 5 of 7
Adaptability
• Is the candidate cooperative, open to the opinions of
others, and able to compromise?
• How does the candidate react to new situations and
efforts to understand and appreciate cultural
differences?
• How does the candidate react to criticism,
constructive or otherwise?
• Will the candidate be able to make and develop
contacts with peers in a foreign country?
• Does the candidate demonstrate patience when
dealing with problems? Is he or she resilient and able
to move forward after setbacks?

27. ©McGraw-Hill Education
Table 15.3 Select Topics for Assessing
Candidates for Overseas Assignments 6 of 7
Career planning
• Does the candidate consider the assignment
more than a temporary overseas trip?
• Is the overseas assignment consistent with the
candidate’s career development and one that was
planned by the company?
• What is the candidate’s overall attitude toward the
company?
• Is there any history or indication of interpersonal
problems with this candidate?

28. ©McGraw-Hill Education
Table 15.3 Select Topics for Assessing
Candidates for Overseas Assignments 7 of 7
Financial
• Are there any current financial and/or legal
considerations that might affect the assignment
(e.g., house or car purchase, college expenses)?
• Will undue financial pressures be put upon the
candidate and his or her family as a result of an
overseas assignment?
SOURCES: P. Caligiuri, Cultural Agility: Building a Pipeline of Successful Global Professionals (San Francisco: Jossey-Bass, 2012); P. Caligiuri, D. Lepak,
and J. Bonache, Managing the Global Workforce (West Sussex, United Kingdom: John Wiley & Sons, 2010); M. Shaffer, D. Harrison, H.
Gregersen, S. Black, and L. Ferzandi, “You Can Take It with You: Individual Differences and Expatriate Effectiveness,“ Journal of Applied Psychology
91 (2006), pp. 109–25; P. Caligiuri, “Developing Global Leaders,” Human Resource Management Review 16 (2006), pp. 219–28; P. Caligiuri, M. Hyland, A.
Joshi, and A. Bross, “Testing a Theoretical Model for Examining the Relationship between Family Adjustment and Expatriates’ Work Adjustment,” Journal of Applied
Psychology 83 (1998), pp. 598–614; David M. Noer, Multinational People Management: A Guide for Organizations and Employees (Arlington, VA: Bureau of National
Affairs, 1975).

29. ©McGraw-Hill Education
Managing Employees in a Global Context 7 of 9
Managing Expatriates in Global Markets continued
• Training and Development of Expatriates
• Cross-cultural training
• Cultural self-awareness
• Culture in the work environment
• Communication differences

30. ©McGraw-Hill Education
Table 15.5 Expatriate Adjustment Factors
Work Environment (the employees, culture, and climate where the expatriate
works)
Language (the ability of the expatriate to communicate)
Job or Task Characteristics (the expatriate’s freedom, autonomy and variety
in how they work)
Leisure Time (opportunities to engage in sports, hobbies and other leisure
activities)
Urbanity (pollution, traffic, and beauty of the location)
Work-Life Balance (ability to balance time spent at work and with family)
Living Quarters (size and type of living accommodations)
Family Life (family cohesion and harmony with partner)
Local Friendships (number and depth of local friendships)
Contact to Those Left Behind (ability to maintain relationships with family and
friends in the home country)
Source: Hippler, T., Caligiuri, P., Johnson, J., Baytalskaya, N. (2014). The development and validation of a theory-based expatriate
adjustment scale. International Journal of Human Resource management, 25(14), 1938-1959.

31. ©McGraw-Hill Education
Managing Employees in a Global Context 8 of 9
Managing Expatriates in Global Markets continued
• Compensation of Expatriates
• Balance sheet approach
• Base salary
• Tax equalization allowance
• Benefits
• Cost-of-living allowances

32. ©McGraw-Hill Education
Figure 15.4 The
Balance Sheet for
Determining
Expatriate
Compensation
Jump to long description in appendix
SOURCE: From C. Reynolds, “Compensation of Overseas Personnel,” in J. J. Famulari, ed., Handbook of Human
Resource Administration, 2nd ed., 1986. Copyright © 1986. Reproduced with permission of The McGraw-Hill Companies, Inc.

33. ©McGraw-Hill Education
Managing Employees in a Global Context 9 of 9
Managing Expatriates in Global Markets continued
• Reacculturation of expatriates
• Culture shock
• Importance of communication and validation

34. ©McGraw-Hill Education
Appendix of Image Long Descriptions

35. ©McGraw-Hill Education
Appendix 1 Figure 15.2 Hourly Compensation Costs in
Manufacturing, U.S. Dollars, 2012
Norway $63.66
Switzerland $57.59
Sweden $49.80
Denmark $48.47
Australia $47.69
Germany $45.79
Austria $41.53
France $39.81
Netherlands $39.62
Canada $36.59
United States $35.67
Japan $35.34
Italy $34.18
United Kingdom $31.23
Spain $26.83
Singapore $24.16
Taiwan $9.46
Mexico $6.36
Philippines $2.10
Return to original slide

36. ©McGraw-Hill Education
Appendix 2 Figure 15.4 The Balance Sheet
for Determining Expatriate Compensation
A diagram shows home country salary includes income
taxes, housing, goods and services, and reserve.
Host-country costs include home- and host-country income
taxes, housing, goods and services, and reserve.
Host-country costs paid by company and from salary
include income taxes, housing, goods and services,
reserve, and other costs not paid for by company.
Home-country equivalent purchasing power includes
premiums and incentives, income taxes, housing, goods
and services, and reserve.
Return to original slide