STAFFING OF INTERNATIONAL BUSINESS

Presented By: Kiran Kumar Borra (14PGDM019) : 9912209277E-mail: kiranphaniborra@outlook.com

In Indian Aspect: HRM

Human resource management is an art of getting things done by HR through Planning, Organization, Staffing, Directing, Controlling,

Motivation in an organization is Human Resource Management.

In Global Aspect: IHRM

International business must procure, motivate, retain and effectively utilize services of people both at the corporate office and at the

foreign plant. The process of procuring, allocation, effectively utilizing human resources in an international business is called

International Human Resources Management.

DEFINATION OF HRM AND IHRM

Human resource management (HRM) refers to the activities an organization carries out to utilize its

human resources effectively

These activities include:

•determining the firm's human resource strategy

•staffing

•performance evaluation

•management development

•compensation

•labor relations

INTRODUCTION OF HRM

•HRM can help the firm reduce the costs of value creation and add value by better serving

customer needs.

•HRM is more complex in an international business because of differences between countries in

labor markets, culture, legal systems, economic systems, and so on

•HRM must also determine when to use expatriate managers (citizens of one country working

abroad), who should be sent on foreign assignments, how they should be compensated, how

they should be trained, and how they should be reoriented when they return home

INTRODUCTION Cont…

International Human Resource Planning is the process by which an organization ensures that it has the right number & kind of people at the right

place and at the right time, capable of effectively and efficiently completing those tasks that help the organization achieve its overall objectives..

There are six key issues in international HRP are as follows:

• Identifying top management potential early.

• Identifying critical success factor for future international management.

• Providing developmental opportunities.

• Tracking and maintaining commitment to individuals in their international career paths.

• Tying strategic business planning to HRP and vice-versa.

• Dealing with multiple business units while attempting to achieve globally and regionally focused.

DEFINITION OF IHRP

• Each Organization needs personnel with necessary qualifications, skills, knowledge, experience &

aptitude .

• Need for Replacement of Personnel - Replacing old, retired or disabled personnel.

• Meet manpower shortages due to labour turnover - Indian Airlines, Gas Authority of India headless

for 10 months.

• Meet needs of expansion / downsizing programmers - As a result of expansion of IT companies the

demand for IT professionals are increasing. PSU’s offering VRS to employees to retrench staff and

labour costs. DOT.COMs firing staff

IMPORTANCE OF HRP

DIFFERENT SOURCES OF EMPLOYEES

• First, the initial cost of airfare, living expenses and transportation in the host country.

• The second expense incurred with bringing expatriates in to the international operation is

the training involved in making sure the people going to the host country are familiar with,

laws, rules, culture, languages and expectations in the new country.

CHALLENGING ASPECTS

• Linking staffing plans with the evolution of the MNC.

• Staffing orientation/ approach of staffing

• Managing expatriates

• Female expatriates

INTERNATIONAL EMPLOYEE SELECTION BASED ON FOUR ISSUES IN

THE CONTEXT OF STAFFING GLOBAL BUSINESS:

Staffing strategies differ based on the life cycle of the MNCs like:

• Setting up the host unit

• Establishing the technology team to begin core operational activities.

• Full blown operations of the host unit with significant role in establishing global objectives

and targets,

• Strong operational leadership at the unit level while globally consolidating with parents.

LINKING STAFFING PLANS WITH THE EVOLUTION OF THE MNC:

• Ethnocentric policy

• Polycentric policy

• Geocentric policy

• Regiocentric policy

APPROACHES TO STAFFING

“ Home country’s culture is to be imposed on subsidiaries” MNC’s exports its HR Policy from Home country to foreign location. •Strategic decisions are made at headquarters

•Key positions in domestic and foreign operations are hold by headquarters’ personnel

ETHNOCENTRIC POLICY

• They Should be able to adjust in family, cultures and personality problems to avoid failure.

• To succeed, should enjoy local entertainment, develop local

relationships and communicate with locals.

• To achieve success, expatriates to have open attitude and take training towards host –

country.

Under ethno centric, lines of communication are one – directional, i.e. advice from headquarters. In fact, home country

attitude and culture

dominates.

THREE FACTORS ARE TO BE CONSIDERED IN THE STAFF

“MNC’s seeks to adapt to the local cultural needs of subsidiaries ”

•Each subsidiary is a distinct national entity with some decision-making autonomy

•Host-country nationals manage subsidiaries who are seldom promoted to HQ positions

•Parent company nationals hold key headquarter positions

POLYCENTRIC

• It eliminate the high cost of relocating expatriate manager and families.

• Offer a great degree of autonomy in decision making to subsidiary heads.

• Host country nationals are less expensive than parent country used and Training Host country’s nationals results in low

cost

• Better local knowledge

• Reduce personal problems

• Host country managers can protect a MNC from hostile treatment by host Government.

• Here subsidiary is allowed some autonomy but financial controls are kept.

• Top people are limited to subsidiary and not for corporate position.

POLY – CENTRIC: HERE PRIMARY POSITIONS ARE FILLED BY NATIONALS FROM

HOST COUNTRY( HCNS)Y. ADVANTAGES OF THIS ARE:

• A global approach - worldwide integration

• View that each part of the organization makes a unique contribution

• Nationality is ignored in favor of ability:

• Best person for the job

• Color of passport does not matter when it comes to rewards, promotion and

development.

GEOCENTRIC

• Reflects a regional strategy and structure; • Regional autonomy in decision making; • Staff move within the designated region, rather than globally.

REGIOCENTRIC

Nationals Advantages Disadvantages

PCN Org. control andcoordination aremaintained & facilitatedPromising managers aregiven international Exp

The promotional opportunities of HCNs are limited.Adaptation to host country may take a long time.

HCN Language and otherbarriers are eliminated.Hiring costs arereduced and no workpermit is required

Control and coordination of HQ may beimpededHCNs have limited career opportunityoutside the subsidiary

TCN Salary and benefitsrequirements may belower than for PCNs.TCNs may be betterinformed than PCNsabout the host countryenvironment.

Transfer must consider possible national animosities (e.g. India and Pakistan) The host government may Present hiringof TCNs.

• Political and legal concerns

• Level of development in foreign locations

• Technology and the nature of the product

• Organizational life cycle

• Age and history of the subsidiary

• Organizational and national cultural differences

CHOOSING AN APPROACH TO IHRM

ISSUES IN EMPLOYEE SELECTION

•International selection is a two way process between the individual and the organization. A prospective candidate may

reject the expatriate assignment either for personal reasons, such as family considerations, or for situational factors.

•However, after an extensive review of literatures on the selection of expats, the researcher identified 18 variables and

grouped them into four categories

•Technical Competency

•Relational Skills

•Ability to cope with variables and

•Family Situation

SELECTION CRITERIA FOR INTERNATIONAL STAFFING

• Interview – structured interview

• The monitoring and targeting of disadvantaged group – (staffing practices

• are strongly influenced by norms and values that are not covered by the law)

• Psychological Testing- mentally fit for international assignment

• Assessment centre – Competency assessment

SELECTION TECHNIQUES OF EXPATRIATES:

• Screening the applicant’s background on the basis of work experience with cultures other than one’s

own, previous overseas travel, knowledge of foreign language and overall Performance.

• Testing the candidate's ability to adapt to the new culture and environment.

• Testing the ability of the spouse and family members of the candidates to the foreign culture and

environment.

• Predicting the adjustment of the candidate

• Testing the skill of adjustment with the host nationals.

• Job duties and responsibilities

SELECTION TECHNIQUES IN GENERAL, IMPORTANT STEPS ARE

• They must be willing and motivated to go overseas

• They must be technically able to do the job

• They must be adaptable

• They must have good inter personal skills and able to form relationship

• They must have good communication ability and

• They must have supportive families

THEREFORE EXPATRIATE MUST MEET 6 BASIC CRITERIA:

• Self-orientedExpresses adaptive concern for self-preservation, self-enjoyment, mental hygiene.

• Perceptual

Accurately understands why host nationals behave the way they do.

• Others-oriented

Cares about host national co-workers and affiliates with them.

• Cultural-toughness

Able to handle the degree to which the culture of the host country is incongruent with that of the home country.

MENDENHALL AND ODDOU’S MODEL SUCCESSFUL EXPATRIATE

SELECTION

Rosalie Tung studied the factors that contributed to expatriate success and

identify different variables that affect success. She groups them into 4 general

categories:

1. Job competence

2. Personality traits

3. Relational abilities

4. Environmental variables and family variables

Which are further divided into two heads: general factors and specific ones

EXPATRIATE’S SUCCESS FACTORS:

GENERAL FACTORS SPECIFIC ATTRIBUTES

JOB Competence Technical skills: knowledge of HQ and host country operations, general

managerial skills, administrative

competence and creativity

Relational Traits Social Skill: Ability to tolerate ambiguity, Courtesy and tact Respect,

kindness and behavioral flexibility Cultural empathy and ethnocentrism

Integrity confidence and emotional stability

Personality Traits Diplomatic Skill: Believe in the mission Congruence of assignment with

career path Interest in overseas experience Willingness to acquire new

behavior patterns and Attitudes Interest to learn Host country language and

practice Adopting attitude of Non – verbal communication Ability to

interact with business associates

Environmental and

Family variables

Motivational Skill: Willingness of the spouse to live Overseas Adaptability

and supportiveness of spouse Stability of marriage

RECENT TRENDS IN INTERNATIONAL STAFFING

CURRENT EXPATRIATE PROFILE

• Expatriate failure: premature return of the expatriate manager to his/her home country

• Cost of failure is high:

• Estimate = 3X the expatriate’s annual salary plus the cost of relocation (impacted by

currency exchange rates and assignment location)

EXPATRIATE PROBLEM

• Family concerns

• Accepted new position in the company

• Completed assignment early

• Cultural adjustment challenges

• Security concerns

• Career concerns

• Quality of life

• Remuneration

REASONS FOR EARLY RETURN

• Reduce expatriate failure rates by improving selection procedures

• An executive’s domestic performance does not (necessarily) equate his/her overseas

performance potential

• Employees need to be selected not solely on technical expertise but also on cross-cultural

fluency

REDUCING EXPATRIATE FAILURE

• Inter-company networking

• Job-hunting assistance

• Intra-company employment

• On-assignment career support

FAMILY-FRIENDLY POLICIES

ADAPTABILITY TO CULTURE CHANGE

Adaptability Of Men Expatriate

Faster adjustment after first year when the age

group is 30-35 and higher level of satisfaction.

Gradual adjustment after third and forth year

when the age group is 25-30 and medium

lSlow adjustment after first year when the age

group is 30-35 and lower level of satisfaction

Adaptability Of Women Expatriates

Slow adjustment after first year when the age

group is 30-35 and lower level of satisfaction .

Faster adjustment after third and forth year

when the age group is 25-30 and medium level

of satisfaction

•People who travel internationally yet are not considered expatriates as they do not relocate to

another country.

•Road warriors, globetrotters, frequent fliers.

•Much of international business involves visits to foreign locations, e.g.

•Sales staff attending trade fairs.

•Periodic visits to foreign operations.

ROLES OF NON-EXPATRIATES

•A Glamorous life

•Excitement and thrills of conducting business deals in foreign locations

•Life style (top hotels, duty-free shopping, business class travel)

•General exotic nature

NON-EXPATRIATES ENJOY POSITIVES AS:

FEMAIL EXPATRIATES ???....

BARRIERS TO FEMALES TAKING INTERNATIONAL ASSIGNMENTS

CAUSES OF LOW REPRESENTATION OF FEMALES

• Better at Relationship skills

• Novelty – foreign clients believe that those who are expatriated are the best.

• Role Models

ADVANTAGES OF FEMALE EXPATRIATE