3. Human Resource Management
It refers to the activities an organization carries out
to use its human resources effectively.
These activities include:
iii. Determine firm’s HR strategy
iv. Staffing
v. Performance Evaluation
vi. Management Development
vii. Compensation
viii. Labour relations
Ch 1 3
4. Importance of HRM
i. Related to the strategy of the firm.
ii. Influence on the character,
development, quality and
productivity of firm’s HR
iii. Helps firms to achieve strategic
goal of reducing cost of value
creation
iv. Helps firms add value by serving
customer needs better.
Ch 1 4
5. How different is Global HRM?
Several key factors make Global HRM
different from domestic
management:
ii. Different labour markets
iii. Mobility problems: legal, economic,
cultural barriers
iv. Different management styles
v. Varied compensation practices
vi. Labour laws.
Ch 1 5
6. Key Issues
i. How to staff key management
posts in the Co.?
ii. How to develop managers, who
can do business in different
countries?
iii. How to compensate people in
different nations?
iv. How to evaluate the performance of
managers in different countries?
v.
Ch 1
Expatriate managers 6
7. Strategic role of Global HRM
STRUCTURE INCENTIVES & CTRL
PEOPLE
PROCESSES CULTURE
Ch 1 7
8. Strategic Role of Global HRM
Strategy is implemented through
organizational architecture.
Right people at right postings.
Effective training to acquire right skill set to
help perform jobs effectively.
Behaviour, congruent with the desired
organizational culture.
Compensation must create incentives for
actions inline with the strategy.
Performance appraisal to measure the
behaviour, firm wants to encourage.
Ch 1 8
9. I. Staffing Policy
Staffing policy is concerned with the
selection of employees for
particular jobs.
iii. Selecting individuals who have the
skill to do a particular job.
iv. Tool for developing and promoting
the desired corporate culture
(norms & value system) of the firm.
Ch 1 9
10. Types of staffing policies
There are three types of staffing
policies in IB:
ii. Ethnocentric approach
iii. Polycentric approach
iv. Geocentric approach
Ch 1 10
11. i. Ethnocentric approach
All key management positions are filled by parent –
country nationals.
One’s own culture is superior
Overlooks important cultural factors
Host country lacks qualified professionals
Maintain a unified corporate culture
Create value by transferring core competencies
Limits advancement opportunities for host country
nationals
Leads to resentment, lower productivity, and high
turnover in employees.
E.g.: Procter & Gamble, Toyota and Matushita
Ch 1 11
12. i. Polycentric approach
Decentralized control
Business Units in different countries have autonomy from
home office, like a local Co.
No standard forms or procedures
Recruits host country nationals to manage subsidiaries,
while parent country nationals occupy key positions at
corporate HQ.
Firm is less likely to suffer from cultural myopia.
Less expensive to implement
Host country nationals have limited opportunities to gain
experience outside their own countries
Gap due to language barriers, cultural differences may
isolate corporate HQ from foreign subsidieries.
Ch 1 12
13. i. Geocentric approach
It seeks the best people for key jobs, throughout the
organization, regardless of nationality.
Hybrid of Ethno and Poly
Based on informed knowledge of home and host
countries.
Enables firms to make best use of its HR
Helps the firm to build a cadre of international executives,
who feel at home working in No. of countries.
Helps building a strong unifying corporate culture and
informal management network.
Reduces cultural myopia
Enhance local responsiveness
Ch 1 13
14. Expatriate Managers
• Expatriates are citizens of one
country, who are working in another
country.
• Inpatriates is a subset of expatriates
who are citizens of a foreign
country, working in the home
country of their multinational
employer. (e.g., citizen of India, who
moves to U.S to work for Microsoft)
Ch 1 14
15. Expatriate selection
Four dimensions that predict success in a foreign posting:
• Self orientation – self esteem, self confidence, mental
well being, adapt their interest in food, sports, music and
hobbies.
• Others orientation – ability to interact with host country’s
nationals, relationship development and willingness to
communicate by learning local language.
• Perceptual ability – to understand the particular
behaviour of people in host countries, empathise.
• Cultural toughness – relationship between country of
assignment and how well an expatriate adjusts
Ch 1 15
16. I. Training and Management
Development
After selection, the next step is training the
manager to do the specific job.
MDP is a broader concept, it is intended to
develop a manager’s skills over her career in the
firm, e.g., sending managers on various foreign
postings over years to build her cross cultural
sensitivity and experience.
To enhance management and leadership skills of
executives.
MDP have a strategic purpose, and helps
reinforce desired culture of the firm by creating an
informal network.
Ch 1 16
17. Types of training
i. Cultural training – understanding the
culture of host country, enhance
effectiveness, familiarization trip before
formal transfer.
ii. Language training – manager’s ability to
interact, help build rapport and improve
manager’s effectiveness.
iii. Practical training – adjust to day to day
life in host country, establish a routine,
successful adaptation, support network
Ch 1 of friends 17
18. I. Performance Appraisal
These are the systems used to evaluate the performance of
managers against some criteria, that the firm judges to be
important for the implementation of strategy and attainment
of competitive advantage.
Important elements of control system.
2 groups evaluate the performance of Expatriates, - Host
country managers and home country managers.
Biasness by cultural frame of reference and expectations
Unfair evaluation
Due to proximity, onsite manager should evaluate soft
variables of expatriate’s performance.
Consultation of home country manager to balance out.
Ch 1 18
19. I. Compensation
National differences in compensation
Payments according to global standards or
country specific standards.
Issues in compensation practices:
iv. How compensation should be adjusted to
reflect national differences in economic
circumstances and practices?
v. How should the expatriate managers be
paid?
Ch 1 19
20. Expatriate Pay
Acc. To “Balance Sheet Approach”, it
equalizes purchasing power across
countries so employees can enjoy the
same living standard in their foreign
posting, as the enjoyed at home.
It also provides financial incentives to
offset qualitative differences between
assignment locations.
Ch 1 20
21. Components of a typical
compensation package
i. Base Salary – in same range as base salary for similar
position in home country.
ii. Foreign Services Premium – extra pay to work outside
country of origin. Offered as inducements to accept
foreign postings. Compensates for living in an unfamiliar
country.
iii. Allowances –
d) Hardship allowance – difficult location, where basic
amenities like health care schools, etc are deficient.
e) Housing allowance – to afford same quality of housing
f) Cost of living allowance – maintain std. of living
g) Education Allowance – expatriate’s children receive
same std. of education as in home country
viii. Taxation
ix. Benefits – Medical, pension, etc.
Ch 1 21