Chapter 14

Human Resource Selection and Development across Cultures

19-1

Objectives

• 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

19-2

Objectives (continued)

• 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 nonmanagerial

employees

19-3

Human Resource Management

Human Resource Management is the set of activities directed at attracting, developing, and maintaining the effective

workforce necessary to achieve a firm’s objectives.

19-4

Figure 19.1 The International Human Resource Management Process

19-5

HRM’s Strategic Content

Recruitment and Selection

Training and Development

Performance Appraisal

Compensation and Benefits

Labor Relations

Contribution to Organizational Effectiveness

International Staffing Needs

19-6

Managerial/ExecutiveEmployees

Nonmanagerial Employees

Scope of Internationalization

19-7

Export Department

Global Organization

International Division

Expertise Needs in Global Organizations

19-8

Product line

Functional skills

Individual country markets

Global strategy

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

19-9

Staffing Philosophy

19-10

Parent Country Nationals

(PCNs)

Third CountryNationals

(TCNs)

Host CountryNationals

(HCNs)

Strategies for Staffing

• Ethnocentric staffing model• Polycentric staffing model• Geocentric staffing model

19-11

Figure 19.2 Necessary Skills and Abilities for International Managers

19-12

Skills and AbilitiesNecessary to Do

the Job

• Technical• Functional• Managerial

Skills and AbilitiesNecessary to Work

in a Foreign Location

• Adaptability• Location-specific skills• Personal characteristics

Improved Chances of Succeeding inan International Job Assignment

Recruitment of Managers

19-13

ExperiencedManagers

Younger Managers

Selecting expatriates is an important element in international HRM.

19-14

Selection of Managers

19-15

Managerial competence

Appropriate training

Adaptability to new situations

Table 19.1 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?

19-16

Table 19.1 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?

19-17

Table 19.1 Questions from AT&T’s Questionnaire for Screening Overseas Transferees 3

• How able are you in initiating new social contacts?• Can you imagine living without a television?• Has it been your habit to vacation in foreign countries?• Do you enjoy sampling foreign cuisine?• What is your tolerance for waiting for repairs?

19-18

Culture Shock

Culture shock is a psychological phenomenon that may lead to feelings of fear, helplessness,

irritability, and disorientation, which is commonly experienced by new expatriates

who may experience a sense of loss regarding their old cultural environment as well as

confusion, rejection, self-doubt, and decreased self-esteem from working in a new

and unfamiliar cultural setting.

19-19

Figure 19.3 Phases in Acculturation

19-20

Honeymoon

Disillusionment

Adaptation

Biculturalism

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

19-21

Disillusionment Phase

• Differences between new and old environments are blown out of proportion• Challenges of everyday living• Many stay stuck in this phase

19-22

Adaptation Phase

• Employee begins to understand patterns of new culture• Gains language competence• Adjusts to everyday living

19-23

Biculturalism

• Anxiety has ended • Employee gains confidence in ability to function productively in new

culture• Repatriation may be difficult

19-24

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

19-25

Overseas Success

19-26

The U.S. military makes sure that its members have “reminders” from home on foreign deployments

Training and Development

• Assessing training needs• Basic training methods• Standardized• Customized

• Developing younger managers

19-27

Figure 19.4 Barriers to Entering Foreign Markets

19-28

Performance Appraisal

Performance Appraisal is the process of assessing

how effectively people are performing their jobs.

19-29

Functions of Performance Appraisals

19-30

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

Compensation Packages

19-31

Cost-of-living allowance

Hardship premium

Tax equalization system

Figure 19.5 Global Cost of Living Survey 2008

19-32

Components of Compensation Packages

19-33

OccupationalStatus

ProfessionalLicensing

RequirementsStandards of

Living

Labor Market Forces

GovernmentRegulations

Tax Codes

Figure 19.6 An Expatriate Balance Sheet

19-34

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

Labor Relations

19-35

Comparative Labor Relations

Collective Bargaining

Union Influence and Codetermination