expatriation management

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Managing HR Globally

2. Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 13-2
HR and the Internationalization of
Business
• More and more companies are doing business
abroad
• Globalization requires that employees who never
leave the home office need to be
“internationalized” to some extent
• Cultural diversity must be addressed

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HR Challenges of International
Business
• Employers face political, social, legal and
cultural differences among countries abroad
• Effective human resource practices must be
developed for each country’s local facility and for
the company as a whole
• Vast distances add to the challenges

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HR Managers Top Global Concerns
• Deployment
• Knowledge and innovation dissemination
• Identifying and developing talent

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What Is International HRM?
• Human resource management concepts and
techniques employers use to manage the HR
challenges of their international operations
• Focuses on three main areas:
1. Management of HR in global corporations
2. Management of expatriate employees
3. Compare HRM practices in variety of
countries

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Which Inter-Country Differences Affect
HRM
• Cultural factors
• Economic systems
• Legal and industrial relations factors

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Cultural Factors
• Cultural differences influence HR policies and
procedures that work best in a particular place
• Researchers have concluded that countries
different along four cultural dimensions:
1. Assertiveness
2. Future orientation
3. Performance orientation
4. Humane orientation

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Economic Systems Factors
From country to country, economic systems vary in
the following:
• Labor laws, regulations and costs
• Hourly compensation and a typical work week
• Vacation and benefits requirements

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Legal and Industrial Relations Factors
• The interplay of directives and country laws
means HR practices must vary from country to
country
– Some EU countries have minimum wages
systems in place while others set national
limits
– The EU sets the workweek at 48 hours but
most countries set it at 40 hours per week
– EU countries have many levels of employee
representation

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Improving International Assignments
Through Selection
• 80% of Financial Times top 100 company CEOs
recently had overseas assignments
• Often the assignments fail due to poor expatriate
entry and reentry preparation
• Companies are taking steps to reduce expat
problems by selecting expats more carefully,
helping spouses get jobs abroad and providing
more ongoing support to the expat and family

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When International Assignments
Succeed
• They focus on knowledge creation and global
leadership development
• They assign overseas people whose technical
skills are matched or exceeded by their cross-
cultural abilities
• Their expatriate assignments include a
deliberate repatriation process

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Expatriate Personality
• Expats are increasingly
younger and single
• Tend to be extroverted,
agreeable and
emotionally stable
individuals
• Tend to have great
cultural empathy

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International Staffing: Home or Local?
• Locals are citizens of the countries where they
are working
• Expatriates are noncitizens of the countries in
which they are working
• Host country nationals are citizens of the
country in which the multinational company has
its headquarters (can be expatriates)
• Third-country nationals are citizens of a
country other than the parent or the host country

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• Using locals can be cost effective and help the
multinational gain favor with the host country
• Using expats helps multinationals meet required
technical qualifications and help the
multinational implement headquarters
instructions and culture
• A hybrid solution that utilizes both locals and
expats can help smooth the multinational’s
transition
International Staffing: Home or Local?, cont.

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Pros and Cons of Offshoring
• Offshoring is having local employees abroad do
jobs previously done in-house
• It is growing rapidly and remains controversial
• Opponents cite job drain means millions of fewer
white-collar jobs for Americans
• Proponents cite global competitiveness and
increased R&D that will increase domestic jobs

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Values and International Staffing Policy
• Ethnocentric companies will make sure the
home country’s attitudes, management style,
knowledge, evaluation criteria, etc., prevail
through filling key management jobs with parent-
country nationals
• Polycentric companies believe that only host
country managers can understand the culture
and behavior of the host country market and the
foreign subsidiary should be managed by host-
country nationals and home office with parent-
country nationals

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• Geocentric companies believe that the best
manager for the firm could be located anywhere
so they look at all management for potential and
staff on the basis of choosing the best people for
key jobs regardless of nationality
Values and International Staffing Policy, cont.

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Ethics and Codes of Conduct
• Exporting a firm’s ethics is problematic as the
code might not translate to the host-country and
can be undermined by cultural norms
• Lawyers recommend a company focus on
creating and distributing a global code of
conduct that creates standards for adhering to
U.S. law that has cross-border impact

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Selecting International Managers
• Screening and testing
• Realistic previews
• Adaptability screening

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Sending Women Managers Abroad
• Women expats are
underrepresented
• Misconceptions
about familial
decisions and
safety concerns add
to the problem

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Misperception can be short-circuited by:
1. Formalize a process for identifying employees
willing to be expats
2. Train managers to understand how employees
really feel about going abroad
3. Let successful female expats recruit
prospective female expats
4. Provide the expat’s spouse with employment
assistance
Sending Women Managers Abroad, cont.

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Training and Maintaining International
Employees
• Cross-cultural training

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Expats can also be trained by a 4-step approach:
• Level 1 focuses on the impact of cultural
differences
• Level 2 aims at getting participants to
understand who attitudes are formed and
influence behavior
• Level 3 provides a factual knowledge of the
target country
• Level 4 provides skill building in areas like
language, adjustment and adaptation skills
Training and Maintaining International
Employees, cont.

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Other Expatriate Training
• Documentary programs about the country’s
geography and socioeconomic/political history
• Cultural assimilation to display the sorts of social
and interpersonal situations expats are likely to
encounter
• Language training
• Sensitivity training
• Actual interactions with people from other
countries

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Trends
• To provide continuing, in-country, cross-cultural
training during early stages of overseas
assignment
• Using returning managers as resources to
cultivate the “global mindsets” of the home-office
staff
• Increased use of software and the Internet for
cross-cultural training

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International Compensation
• Balance Sheet Approach based on the following:
– Income taxes
– Housing
– Goods and services
– Discretionary expenses
• Premiums
• Incentives

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Establishing a Global Pay System
• Phase I: Formulate a global compensation
framework
• Phase II: Organize jobs and appraisals
• Phase III: Create detailed pay policies
• Phase IV: Talent management framework
• Phase V: Ongoing program assessment

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Performance Appraisal of International
Managers
• Stipulate the assignment’s difficulty level and
adapt performance criteria to the situation
• Weigh the evaluation more toward the onsite
manager’s appraisal than toward the home-site
manager’s
• If the home-office manager does the actual
written appraisal have him or her use a former
expatriate from the same overseas location for
advice

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Safety and Fair Treatment Abroad
• Provide expats with training about traveling,
living abroad and the place they’re going to
• Tell them not to draw attention to the fact that
they’re foreigner
• Have travelers arrive at airports as close to
departure time as possible and wait in areas
away from the main flow of traffic
• Equip the expat’s car and home with adequate
security systems

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• Tell employee to vary their departure and arrival
times and take different routes
• Keep employees current on crime and other
problems by regularly checking the State
Department’s travel advisory service and
consular information sheets
• Advise employees to remain confident at all
times
Safety and Fair Treatment Abroad, cont.

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Repatriation: Problems and Solutions
• 40-60% of expats will
quit within 3 years of
returning home
• Formal repatriation
programs are useful
• Make sure the expat
and family do not feel
the company has left
them adrift

39. Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 13-39
How to Implement a Global HR System
• Form global HR networks
• Remember that it’s more important to
standardize ends and competencies than
specific methods
• Remember that global systems are more
accepted in truly global organizations
• Investigate pressures to differentiate; then
determine legitimacy

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• Remember, “You can’t communicate enough”
• Dedicate adequate resources for the global HR
effort
How to Implement a Global HR System, cont.