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©2004 Prentice Hall20-1
Chapter 20:InternationalHuman Resource Management and Labor Relations
International Business, 4th Edition
Griffin & Pustay
©2004 Prentice Hall20-2
Chapter Objectives_1
Describe the nature of human resource management in international business
Detail how firms recruit and select managers for international assignments
Explain how international businesses train and develop expatriate managers
Describe labor relations in international business
©2004 Prentice Hall20-3
Chapter Objectives_2
Discuss how international firms conduct performance appraisals and determine compensation for their expatriate managers
Analyze retention and turnover issues in international business
Explain basic human resource issues involving non-managerial employees
©2004 Prentice Hall20-4
Human Resource Management (HRM)
Set of activities directed at attracting, developing, and maintaining the effective workforce necessary to achieve a firm’s objective
Differences in culture, levels of economic development, and legal systems among countries may force changes in HRM systems
©2004 Prentice Hall20-5
Figure 20.1 The International Human Resource Management Process
HRM’s Strategic Content
Recruitment and Selection
Training and Development
Performance Appraisal
Compensation and Benefits
Labor Relations
Contribution to Organizational Effectiveness
©2004 Prentice Hall20-6
International Managerial Staffing Needs
Staffing Issues– Recruiting– Training– Retaining
Staffing Categories– Managerial and Executive Employees– Non-managerial Employees
©2004 Prentice Hall20-7
Scope of Internationalization
Size of staffing tasks depends on scope of firm’s international involvement– Export department
– International division
– Global organization
©2004 Prentice Hall20-8
Centralization versus Decentralization of Control
Centralized firms– Favor home country managers– Most common amongst international
division form Decentralized firms
– Favor host country managers– Most common amongst multidomestic
firms
©2004 Prentice Hall20-9
Staffing Philosophy
Parent Country Nationals (PCNs) Host Country Nationals (HCNs) Third Country Nationals (TCNs)
©2004 Prentice Hall20-10
Strategies for Staffing
Ethnocentric staffing model Polycentric staffing model Geocentric staffing model
©2004 Prentice Hall20-11
Figure 20.2 Necessary Skills and Abilities for International Managers
Skills and AbilitiesNecessary to DoThe Job
•Technical•Functional•Managerial
Skills and AbilitiesNecessary to WorkIn a Foreign Location
•Adaptability•Location-specific skills•Personal characteristics
Improved Chances of Succeeding inAn International Job Assignment
©2004 Prentice Hall20-12
Recruitment
Experienced Managers Younger Managers
©2004 Prentice Hall20-13
Selecting expatriates in an important element in international human resource management
©2004 Prentice Hall20-14
Managerial Selection
Managerial competence Appropriate training Adaptability to new situations
©2004 Prentice Hall20-15
Table 20.1 Questions from AT&T’s Questionnaire for Screening Overseas Transferees_1
Would your spouse be interrupting a career to accompany you on an international assignment? If so, how do you think this will affect your spouse and your relationship with each other?
Do you enjoy the challenge of making your own way in new situations?
Securing a job upon reentry will be primarily your responsibility. How do you feel about networking and being your own advocate?
How able are you in initiating new social contacts Can you imagine living without a television?
©2004 Prentice Hall20-16
Table 20.1 Questions from AT&T’s Questionnaire for Screening Overseas Transferees_2
How important is it for you to spend significant amounts of time with people of your own ethnic, racial, religious, and national background?
As you look at your personal history, can you isolate any episodes that indicate a real interest in learning about other peoples and cultures?
Has it been your habit to vacation in foreign countries?
Do you enjoy sampling foreign cuisine? What is your tolerance for waiting for repairs?
©2004 Prentice Hall20-17
Culture Shock
Psychological phenomenon that may lead to feelings
of fear, helplessness, irritability, and disorientation
©2004 Prentice Hall20-18
Figure 20.3 Phases in Acculturation
Honeymoon
Disillusionment
Adaptation
Biculturalism
©2004 Prentice Hall20-19
Honeymoon Phase
New culture seems exotic and stimulating
Excitement of working in new environment makes employee overestimate ease of adjusting
Lasts for first few days or months
©2004 Prentice Hall20-20
Disillusionment Phase
Differences between new and old environments are blown out of proportion
Challenges of everyday living Many stay stuck in this phase
©2004 Prentice Hall20-21
Adaptation Phase
Employee begins to understand patterns of new culture
Gains language competence Adjusts to everyday living
©2004 Prentice Hall20-22
Biculturalism
Anxiety has ended Employee gains confidence in ability
to function productively in new culture Repatriation may be difficult
©2004 Prentice Hall20-23
Overseas Success
Likelihood of managers being successful at overseas assignment increases if the managers– Can freely choose whether to accept or reject the
assignment– Have been given a realistic preview of the job and
assignment– Have been given a realistic expectation of what their
repatriation assignment will be– Have a mentor back home who will guard their
interests and provide support– See a clear link between the expatriate assignment and
their long-term career path
©2004 Prentice Hall20-24
Training and Development
Assessing training needs Basic training methods
– Standardized
– Customized
Developing younger managers
©2004 Prentice Hall20-25
Performance Appraisal Process of assessing how effectively people
are performing their jobs Purpose
– To provide feedback to individuals about how well they are doing
– To provide a basis for rewarding top performers– To identify areas in which additional training
and development may be needed– To identify problem areas that may call for a
change in assignment
©2004 Prentice Hall20-26
Compensation Packages
Include salary and nonsalary items Determined by
– Labor market forces– Occupational status– Professional licensing requirements– Standards of living– Government regulations– Tax codes
©2004 Prentice Hall20-27
Table 20.2 Annual Cost of Living in Selected Locations Worldwide, 2003
Rank City Index Rank City Index
1 Tokyo, Japan 126.1 11 Shanghai, China 98.4
2 Moscow, Russia 114.5 12 St. Petersburg, Russia 97.3
3 Osaka, Japan 112.2 13 Oslo, Norway 92.7
4 Hong Kong 111.6 14 Hanoi, Vietnam 89.5
5 Beijing, China 105.1 15 Copenhagen, Denmark 89.4
6 Geneva, Switzerland 101.8 16 Ho Chi Minh City, Vietnam
88.5
7 London, UK 101.3 17 Milan, Italy 87.2
8 Seoul, South Korea 101.0 18 Shenzhen, China 86.7
9 Zurich, Switzerland 100.3 19 Guangzhou, China 86.7
10 New York City, USA 100.0 20 White Plains, NY, USA 86.2
©2004 Prentice Hall20-28
Differential Compensation
Cost-of-living allowance Hardship premium or foreign-service
premium Tax equalization system
©2004 Prentice Hall20-29
Figure 20.5 An Expatriate Balance Sheet
U.S. Domestic Base Salary
Taxes Consumption Savings
Foreign andExcess U.S. TaxesPaid by company
Excess Foreign CostsPaid by company
Foreign ServicePremium/ HardshipAdded by company
U.S. Levels
U.S. Spendable Income
U.S. Hypothetical Housing and UtilitiesU.S. Auto Purchase
U.S. Hypothetical Tax and
Social Security
©2004 Prentice Hall20-30
Labor Relations
Labor relations in a host country often reflects laws, culture, social structure, and economic conditions
Union membership may be high
©2004 Prentice Hall20-31
These striking South Korean workers are picketing government offices in Seoul