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International Human ResourceManagementChapter 10

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Learning Objectives

Define international human resource management (IHRM)Understand how corporate strategy influences IHRM

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Learning Objectives (cont.)

Explain major IHRM functions: recruitment and selection, training and development, performance evaluation, compensation and benefits, and labor relationsDiscuss additional concerns of managing expatriate employees

Major HRM FunctionsStaffing

Recruiting and selection

Training and developmentCompensation and benefits

Employee motivationPerformance evaluation

Labor relations

IntrinsicIntrinsicParticipate in

decision making

Greater jobfreedom anddiscretion

More responsibility

More interesting

workOpportunitiesfor personal

growth

Diversity ofactivities

Cost -of- livingincreases

Labormarket

adjustment

Time-in-rank increase

Profit sharing

Explicit Membership-

basedProtection programs

Pay for timenot worked

Services andperquisites

Non-FinancialNon-Financial

Preferred officefurnishings

Preferred lunch hours

Assigned parking spaces

Preferredwork

assignments

Business Cards

Own secretary

Impressive titles

Employee Compensation

FinancialFinancial

ExtrinsicExtrinsic

-

Performance-based

Piecework

Commission

Incentiveplans

Performancebonuses

Merit payplans

Implied Membership-

based

Per Capita Incomes by Metropolitan Area (U.S. Average: $29,469)

TOP 10

1 San Francisco, Ca$57,41

46

West Palm Beach, Boca Raton, Fla

$41,007

2 San Jose, Ca$55,15

77 Trenton, NJ $40,954

3

New Heaven, Bridgeport, Stamfort, Danbury, Waterbury, Conn.

$46,542

8Seattle, Bellevue, Everett, Wash

$40,686

4 Bergen, Passaic, NJ$42,72

69

Nassau, Suffolk, NY

$40,353

5Middelsex, Sommerset, Hunterdon, NJ

$42392 10 Naples, Fla $40,121Source: U.S. Department of Commerce Bureau of Economic Analysis, The Mercury News, August 4, 2002

Per Capita Incomes by Metropolitan Area (U.S. Average: $29,469)

BOTTOM 10

1McAllen, Edinburg, Mission, Texas

$13,344 6Auburn, Opelika, Ala.

$18,484

2Brownsville, Harlingen, San Benito, Texas

$14,906 7 El Paso, Texas $18,535

3 Laredo, Texas $15,114 8 Merced, CA $18,536

4 Yuma, Ariz. $16,002 9Provo, Orem, Utah

$19,128

5 Las Cruces, N.M. $17,321 10 Pine Bluff, Ark. $19,826

Source: U.S. Department of Commerce Bureau of Economic Analysis, The Mercury News, August 4, 2002

Gender Pay Gap Developments in EU and the US

.Country Time Period Women's Average Pay as Percentage of Men's Trends

Austria 1990-99 68% → 67% (monthly gross earnings) Increasing

Belgium 1991-9675.3% → 79.4% for blue-collar workers 64.2% → 70.1% for white-collar workers (gross annual earnings).

Narrowing

Denmark 1995-1999 83.61% → 82% in private sector Stable

Finland 1990-99 80% → 82% (monthly earnings). Stable

France 1991-9884.2% → 88.2% for full-time employees (monthly pay) 75.1% → 75.8% for all employees including part-time

No information

Germany 1997-200075.3% → 75.8% for blue-collar workers (West Germany)69.4% → 70.4% for white-collar workers (West Germany).

Narrowing

Greece 1996-1998 80% (average gross hourly earnings) Narrowing

Ireland 1987-97 80% → 84.5% (hourly earnings) Narrowing

Italy 1991-98 82.3% → 81.7% (annual income).No information

Luxembourg 1995-2000 85% (1999 average, no overtime figures given) Narrowing

Netherlands 1990-98 73% → 77% (hourly pay) Narrowing

Portugal 1997-98 77% → 76.5% (monthly pay) Increasing

Spain 1996-2000 74.9% → 76.9% (monthly pay) Narrowing

Sweden 1995-2000 84% → 82% (monthly pay) Increasing

UK 1990-2000 76.6% → 80.6% (hourly pay) Narrowing

U.S. 1983-2000 66.6% → 76.0% (weekly full-time wage and salary) NarrowingSource: Adapted from National data - EIRO; Eurostat data, May 2001, Theme 3; US DOL Bureau of Labor Statistics, August 2001

868584.5

82.98282

80.679.6

77.876.27675.8

7372.3

65.278.6

76

0 20 40 60 80 100

Norway

Luxembourg

Ireland

Denmark

U.K.

Sweden

Finland

Belgium

Spain

Greece

Netherlands

France

Germany

Portugal

Austria

EU Average

U.S.

Women’s Average Earnings as Percentage of Men’s, 1999

Wal-Mart’s Gender-based Pay Differentials

Job Categories

Average Annual Earnings 2001

No. of Employe

es

% of Wome

n

Male Salaries

Female Salaries

Gender

Gap

Regional VP 39 10% $419,400

$279,800

.67

District MGR 508 10 239,500

177,100 .74

Store MGR 3,241 14 105,700

89,300 .84

Assistant MGR

18,731 36 39,800

37,300 .94

MGMT Trainee

1,203 41 23,200

22,400 .97

Dept Head 63,747 78 23,500

21,700 .92

Sales Associate

100,003 68 16,500

15,100 .92

Cashier 50,987 93 14,500

13,800 .95

Based on Business Week March 3, 2003

Family Impact on Gender-based Pay Ratios (Corrected for Hours)

CountryAll

WorkersMarried Workers

Single Workers

Germany (monthly) .6880 .5730 1.027

United Kingdom (annual)

.6337 .5966 .9489

United States (annual) .6849 .5944 .9552

Austria (monthly) .7256 .6558 .9703

Switzerland (monthly) .6174 .5768 .9449

Sweden (annual) .7673 .7274 .9350

Norway (annual) .7308 .7160 .9158

Australia (annual) .7489 .6909 .9144

Average .6995 .6417 .9514Source: Adapted from The gender earning gaps: Learning from international comparisons, Blau and Kahn, American Economic Review, (82) 2, 1992

The Dual-career Penalty Lower Pay

Average income of men with MBA and whose wives were:

Working$95,067

Not Working$125,120

Up 48% in six years Up 59% in six years

Fewer Promotions% entered top management positions whose wives

were:

Working28%

Not Working38%

Source: Effects of alternative family structures on managerial career paths, Schneer, and Reitman, Academy of Management Journal 30 (4), 1993

Why both are working?

16.7%31.6% 30.2% 30.9% 36.4%

65.8% 66.5%

202.2%

0%

50%

100%

150%

200%

250%

Top 5%(male)

Top 5%(f amily)

Tax NewHouse

College(bublic)

New Car College(Private)

Day Care

Source: Is your family wrecking your career, Fortune, March 17, 1997: 71

Percentage change 1975-95 Income vs. Costs

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Major Areas of International Human Resource Management

The management of human resources in global corporationsThe management of expatriate employeesThe comparison of human resource management (HRM) practices in a variety of different countries

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Approaches to Managing and Staffing Subsidiaries

EthnocentricPolycentricRegiocentricGeocentric/Global

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Choosing an Approach to IHRMCorporate international strategyPolitical and legal concernsLevel of development in foreign locationsTechnology and the nature of the productOrganizational life cycleCultural differences

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Recruitment and SelectionEmployee classification

Parent country national (PCN)Host country national (HCN)Third country national (TCN)

Managing and staffing approachesSelecting the right candidate

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Training and Development

Planned individual learning, organization development, and career developmentDelivery of programs worldwideDeveloping globally minded managers

Cultural Impacts on Training and Development Practices

Human resource development rolesAnalysis and designDevelopment and deliveryAdministration and environment

Performance EvaluationPurposeTimeframeStandardsFeedbackMarket conditionsEconomic factors

Compensation and Benefits

Salary-related and non-salary related factorsOrganizational philosophy and strategyCost to the organizationEmployee motivationCompany image

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Typical Expatriate BenefitsOverseas premiumHousing allowanceCost of living allowance (COLA)Moving expensesTuition for dependent educationHome leaveTax reimbursement plans

Labor RelationsLabor relations function

Identify and define roles of management and workers in the workplaceCollective bargaining

Union organizationsUnion membershipLabor law

Union Density Figures for a Selected Group of Countries

CountryPercentage of Union

MembershipCountry

Percentage of Union Membership

Argentina 28% Greece 30%

Brazil 13-30% Italy 15%

Canada 29.5% Japan 24.2%

Chile 12.3% Malaysia 9.1%

China 92% Mexico 25-30%

Costa Rica 15% New Zealand 34.4%

Egypt 50% Span 11%

France 8-10%United States

15.8%

Germany 39.5% Zimbabwe 17%

Source: U.S. Department of Labor, Bureau of International Labor Affairs, Foreign Labor Trends and Bureau of Labor Statistics, dates as indicated in the table.

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How Situational Factors Influence the Selection of a CCT Method

Degree ofTrainingRigor

High

Low

High

LowLow High

Classroom Language TrainingFilms

FACTUALBooks

LecturesArea Briefings

Case StudiesCulture Assimilators

Sensitivity TrainingANALYTICAL

Interactive Language TrainingRole Plays

Field TripsSimulations

EXPERIENTIAL

Degree of Job Novelty

Degree ofCulture Novelty

Train

ing M

ethods

Degree of Interaction with Host Country Nationals

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Managing ExpatriatesExpatriate Failure Rates

U.S.: 10-40%Western Europe: 5-15%Japan: Less than 5%

Selection of ExpatriatesTechnical competenceAdaptabilityCommunication skillsFamily stabilityGender AgeEthnicity

Expatriate TrainingCross-Cultural AdjustmentExpatriate EvaluationExpatriate CompensationExpatriate Reentry

Minimize “reverse culture shock”Integrate the manager backinto the home officeAdjustments to a newor lower standard of livingAllow for reentry time

Retaining the Expatriates

80% believe they would be promotedAbout 23% get the promotion20% want to leave the company upon returnAverage turnover cost is $250,000

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Convergence or Divergence?

Large corporations’ preference for consistent worldwide systemsSmaller companies’ desire for more professional systems

Need to follow local HRM lawsDevelopment of unique techniques and practices to suit local cultural and legal requirements

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Implications for ManagersEvery international manager has responsibility for effectively managing human resources, and therefore, must understand IHRM functionsIt is helpful to understand IHRM because of potential impact on your career

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Cross-Cultural Training Methods

Explain the major aspects of the host country culture, including customs, traditions, every daybehaviors.

Explain the history, geography, economy, politics, and other general information about thehost country and region.

Portray a real-life situation in business or personal life to illustrate some aspect of livingor working in the host culture.

Cultural Briefings

Area Briefings

Cases

Cross-Cultural Training Methods (cont.) Role Playing

Culture Assimilator

Field Experiences

Allows the trainee to act out a situation that heor she might face in living or working in thehost country.

Provides a written set of situations that the trainee might encounter in living or working inthe host country. Trainee selects one from a set of responses to the situation and is givenfeedback as to whether it is appropriate and why.

Provide an opportunity for the trainee to go tothe host country or another unfamiliar culture to experience living and working for a short time.

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Culture Shock Cycle

Low

High

1 2 3 4 5 6

Months in a New Culture

Mood

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Classifying Employees

Parent Country National (PCN)Host Country National (HCN)Third Country National (TCN)

Comparing PaychecksMedian Annual Earnings as a Share of White Men’s

Year ofdata

BlackMen

HispanicMen

WhiteWomen

BlackWomen

HispanicWomen

1975 74.3 72.1 57.5 55.4 49.3

1980 70.7 70.8 58.9 55.7 5.05

1985 69.7 68.0 63.0 57.1 52.1

1990 73.1 66.3 69.4 62.5 54.7

1993 74.0 64.8 70.8 63.7 53.7

USN & WR-Basic Data: U.S. Department of Labor (Cited by U.S. News, February 13, 1995)

Who Does What?Percentage of Positions Held Women Blacks Hispanics

Doctors 22.3 4.2 5.2

Nurses 93.8 9.3 2.9

Teachers (Colleges/Universities) 42.5 5.0 2.9

All Other Teachers 74.9 8.9 4.3

Engineers 8.3 3.7 3.3

Lawyers 24.6 3.3 3.1

Architects 16.8 1.4 3.7

Natural Scientists 31.0 3.6 1.6

Clergy 11.1 8.7 3.2

Construction Trades 2.2 6.5 11.4

Firefighters 2.1 9.1 5.4

Librarians 84.1 10.5 3.7

Women represents 51.2% of the U.S. adult population, blacks 12.4%, and Hispanics 9.5% USN & WR - basic Data: U.S. Department of Labor (Cited by U.S. News, February 13, 1995)