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Chapter17
- 1. © 2010 by Prentice Hall 17-1 International HRM Challenge Chapter 17 Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall
- 2. © 2010 by Prentice Hall 17-2 Stages of International Involvement Determining the Mix of Host Country and Expatriate Employees Expatriate Assignments Challenges Enhancing the Effectiveness with HRM Developing HRM Policies in Global Context HRM and Exporting Firms Chapter 17 OverviewChapter 17 Overview Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall
- 3. © 2010 by Prentice Hall 17-3 Expatriate—citizen of one country Lives and works in another country Stages of International InvolvementStages of International Involvement Multinational corporation (MNC) Firm with assembly and production Facilities in several regions of the world Transnational corporation Firm with highly decentralized operations In many countries Has little allegiance to its country of origin Weak ties to any given country Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall
- 4. © 2010 by Prentice Hall 17-4 Stages of International InvolvementStages of International Involvement Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall
- 5. © 2010 by Prentice Hall 17-5 Outsourcing Used extensively by firms in stages 3 to 5 Challenges include o Online security o Safety issues o Client complaints Stages of International InvolvementStages of International Involvement Falling Barriers Trade, production, services, and finances barriers largely disappeared Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall
- 6. © 2010 by Prentice Hall 17-6 Wholly owned subsidiary and joint ventures Must decide who will manage overseas unit Three approaches Ethnocentric approach Polycentric approach Geocentric approach The Mix of Host-Country and ExpatriateThe Mix of Host-Country and Expatriate EmployeesEmployees Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall
- 7. © 2010 by Prentice Hall 17-7 Reliance on expatriates increases when: The Mix of Host-Country andThe Mix of Host-Country and Expatriate EmployeesExpatriate Employees Sufficient local talent is not available Part of firm’s overall business strategy is to create a corporate-wide global vision International units and domestic operations are highly interdependent The political situation is unstable Are significant cultural differences between the host and home countries Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall
- 8. © 2010 by Prentice Hall 17-8 20–40% failure rate for U.S. expatriates 3–4 times higher than Europeans or Asians Challenges of Expatriate AssignmentsChallenges of Expatriate Assignments Many reasons assignments end in failure Career blockage Culture shock Lack of predeparture cross-culture training Overemphasis on technical qualifications Getting rid of a troublesome employee Family problems Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall
- 9. © 2010 by Prentice Hall 17-9 Difficulties on Return Challenges of Expatriate AssignmentsChallenges of Expatriate Assignments Lack of respect of acquired skills Loss of status Poor planning for return position Reverse culture shock Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall
- 10. © 2010 by Prentice Hall 17-10 Selection Emphasize cultural sensitivity as a selection criterion Establish a selection board of expatriates Require previous international experience Consider hiring foreign-born employees who can serve as future expatriates Screen candidates’ spouses and families Develop an effective selection program for expatriates and the locals who help Using HRM to Effectively ManageUsing HRM to Effectively Manage ExpatriatesExpatriates Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall
- 11. © 2010 by Prentice Hall 17-11 TrainingTraining Should begin 9–12 months in advance of the assignment At least some training should go to the expatriate’s family Are three approaches to training: Information-giving approach Affective approach Impression approach Local managers need to be prepared to train incoming expatriates Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall
- 12. © 2010 by Prentice Hall 17-12 Career DevelopmentCareer Development Position the international assignment as a step toward advancement within the firm Provide support for expatriates Provide career support for spouse Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall
- 13. © 2010 by Prentice Hall 17-13 CompensationCompensation Provide a disposable income equivalent to what the expatriate would receive at home Provide an explicit “add-on” incentive for accepting an international posting Don’t put expatriates in the same jobs held by locals or lower-ranking jobs Calculating compensation for expatriates is very difficult Fluctuating exchange rates Cost of living varies tremendously Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall
- 14. © 2010 by Prentice Hall 17-14 Role of HR Department Women and International Assignments Using HRM to Effectively ManageUsing HRM to Effectively Manage ExpatriatesExpatriates Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall
- 15. © 2010 by Prentice Hall 17-15 Western-style management likely to clash with foreign norms and values Must mold practices to culture Developing HRM Policies in a GlobalDeveloping HRM Policies in a Global ContextContext Hofstede’s 5 Dimensions of Culture Power distance Individualism Uncertainty avoidance Masculinity/femininity Long-term/short-term orientation Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall
- 16. © 2010 by Prentice Hall 17-16 EEO prohibition of discrimination based on age, sex, race, etc. apply to international assignments too Foreign national employees of U.S. companies working outside the US are not covered by U.S. employment law Immigration and Control Act (1986) Non-U.S. citizens living and working in the U.S. May not be discriminated against EEO in the International ContextEEO in the International Context Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall
- 17. © 2010 by Prentice Hall 17-17 “National culture” may be an elusive concept Culture changes over time Companies sometimes blame international personnel problems on culture without study Virtually no data on the success/failure of HRM practices as a function of culture Different cultures often have very different notions of right and wrong The business laws of other countries often force companies to change their practices Developing HRM Policies: CaveatsDeveloping HRM Policies: Caveats Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall
- 18. © 2010 by Prentice Hall 17-18 Key impediments to exporting: Lack of knowledge about international markets, business practices, and competition Lack of management commitment to generating international sales Impediments can be attributed to lack of utilization of human resources Human Resource Management andHuman Resource Management and Exporting FirmsExporting Firms Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall
- 19. © 2010 by Prentice Hall 17-19 Ethics and Social Responsibility Many ethical dilemmas face expatriates Ethical and legal are not the same Foreign Corrupt Practices Act (1977) Other International HR ConsiderationsOther International HR Considerations Political Risk Possibility that social or government pressures negatively impact operations Expatriates often caught in middle o Should understand political situation Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall
- 20. © 2010 by Prentice Hall 17-20 Are five stages of international involvement Are three approaches to managing foreign ops Ethnocentric, polycentric and geocentric Emphasize cultural sensitivity when selecting people for international assignments Position international assignments as step towards advancement in the firm Don’t transfer home HRM practices abroad Reinforce export activities with HR practices Summary and ConclusionsSummary and Conclusions Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall
Editor's Notes
- HRM Practices by Stage: In general, the higher the stage, the more HR practices need to be adapted to diverse cultural, economic, political, and legal environments, specifically: 1 - staffing, training, and compensation are dictated primarily by local and/or national forces 2 - HRM should facilitate exporting of the firm’s products through managerial incentives, appropriate training, and staffing strategies that focus on the demands of international customers 3 - HRM practices need to focus on the selection, training, and compensation of expatriates, as well as on the development of HR policies for local employees where the foreign facilities are located 4 - many personnel decisions affecting foreign branches are still made at corporate headquarters, typically by an international personnel department 5 - HRM practices are designed to blend individuals from diverse backgrounds to create a shared corporate (vs. national) identity and a common vision
- Outsourcing: - use is growing & has become a fact of business life - occurs for all types of jobs and across most industries - online security a real threat to outsource firms, particularly ones with access to sensitive data - safety has become an issue given the recent scandals with unsafe toys, food, and drugs in mainland China - are a large number of complaints from clients being forced to deal with customer representatives in foreign countries - HR can help to reduce these problems with outsourcing by having a role in determining how workers are selected, the type of training received, criteria used to reward employees (for instance, quantity versus quality), how new employees are socialized, efficient monitoring systems, etc.
- Ethnocentric approach - top management and other key positions filled by people from the home country Polycentric approach - international subsidiaries managed and staffed by personnel from the host country Geocentric approach - nationality is deliberately downplayed - the firm actively searches on a worldwide or regional basis for the best people to fill key positions
- The Challenges of Expatriate Assignments: - one of the most challenging tasks for a firm operating internationally is to manage its expatriate work force effectively - failure rate for US expatriates significantly higher than others - each premature returns cost companies bet. $180,000 & $400,000 in 2009 - are many reasons for failure of expatriate assignments
- Difficulties on Return: - repatriates – expatriates who have returned home - repatriates experience additional problems, which include: - lack of respect for acquired skills - loss of status - poor planning for return position - reverse culture shock
- Effectively Managing Expatriate Assignments with HRM Policies and Practices - companies can minimize the chances of failure by putting place a sensible set of HRM policies and practices - such policies and practices would pertain to selection, training, career development, and compensation - adequate practices in these areas can be used to avoid problems.
- Training: - the assumption that people everywhere respond in similar fashion to the same images, symbols, and slogans has hurt U.S. companies - cross-cultural training sensitizes candidates for international assignment - it should focus on local culture, customs, language, tax laws, and government Information-giving approach - lasts less than a week - merely provides indispensable briefings and a little language training Affective approach – lasts one to four weeks - focuses on providing the psychological and managerial skills the expatriate will need to perform effectively during a moderate-length assignment Impression approach – lasts one to two months - prepares the manager for a long assignment with greater authority and responsibility - provides field experiences and extended language training
- Career Development: - the expatriate’s motivation to perform well on an international assignment depends to a large amount on the career development opportunities offered by the employer - at a minimum, successful career planning for expatriates requires the firm to do the three things listed above
- Compensation: - firms can use compensation packages to enhance the effectiveness of expatriate assignments - but compensation policies can create conflict if locals compare their pay packages to the expatriate’s and conclude that they are being treated unfairly - calculating compensation packages for expatriate employees is one of the most difficult tasks facing MNCs
- HR Department: - expatriates want HR to remove obstacles - “The first thing that HR needs to do is to make sure it knows how to handle the logistics such as getting the furniture moved. Because you have all of these little . . . [problems] that take up all of your time when you are trying to deal with other things . . .” - many expatriates consider the HR department unprepared to meet the requirements of a global workforce Women & International Assignments: - only 13% of US managers sent abroad are women - are three common misconceptions about women’s ability and willingness to handle international assignments - assumption that women are not as internationally mobile as men - assumption that women encounter more work–life conflict working on a global schedule - most believe clients outside the United States are not as comfortable doing business with women as they are with men
- Developing HRM Policies in a Global Context - companies operating in multiple countries need to worry about meeting the special needs of expatriate employees and enhancing their performance, - also need to be concerned with design and implementation of HRM programs in diverse cross-cultural settings - in many countries, reliance on U.S., or Western, managerial practices is likely to clash with deeply ingrained norms and values - managers should mold these practices to the cultural environment in which a particular facility is located Hofstede’s Dimensions of Culture: 1. Power distance. Extent to which individuals expect a hierarchical structure that emphasizes status differences between subordinates and superiors 2. Individualism. Degree to which a society values personal goals, autonomy, and privacy over group loyalty, commitment to group norms, involvement in collective activities, social cohesiveness, and intense socialization. 3. Uncertainty avoidance. Extent to which a society places a high value on reducing risk and instability. 4. Masculinity/femininity. Degree to which a society views assertive or “masculine” behavior as important to success and encourages rigidly stereotyped gender roles. 5. Long-term/short-term orientation. Extent to which values are oriented toward the future (saving, persistence) as opposed to the past or present (respect for tradition, fulfilling social obligations).
- EEO in the International Context: - globalization of industry raises numerous EEO issues, - some of which the U.S. courts addressed and others, not - is not a well-developed area of employment law
- Important Caveats: - effectiveness of an HRM practice depends on how well it matches a culture’s value system - multinationals have to find a balance balance between HR policies tailor-made for a particular cultures and the need to integrate global consistency with local adaptability
- Human Resource Management and Exporting Firms: - key impediments to exporting are - lack of knowledge of international markets, business practices, and competition - lack of management commitment to generating international sales - these impediments can be largely attributed to poor utilization of HR within U.S. firms rather than to external factors - is some evidence that a company that clearly reinforces international activities in its HRM practices is more likely to fare better in its export attempts - reinforcing internal activities in HRM practices requires a company to consider international experience when making staffing decision, provide developmental activities related to carrying out jobs in the international context, create career ladders that take the long-term approach into account, and design a reward structure that motivates key organizational players to take full advantage of the company’s export potential
- Ethics & Social Responsibility: - globalization increases the possibility that managers will face ethical dilemmas - expatriates may feel that if they apply a stricter code of ethics than managers at other firms, the company may be put at a disadvantage, - what is ethical and what is legal may differ & differences are probably more pronounced when HR practices are considered on a global basis - Foreign Corruption Practices Act (1977) expressly forbids substantial payments by U.S. firms to foreign officials to influence decisions - does not appear to have had an adverse effect on U.S. firms operating overseas Political Risk: - possibility that social (and often governmental) pressures in a foreign country may negatively affect the firm’s operation - expatriates are increasingly thrown into the middle of political storms, and they need to be able to respond appropriately to manage potentially damaging situations - means that besides learning about the foreign culture, expatriates should be prepared to deal with the political forces that they might face