Dr. Hassan HR Management and the Corporate Brand

Human Resource Management

and the Corporate Brand

Dr. Salah S. Hassan, Ph.D.

Professor of Strategic Brand Management

The George Washington University

[email protected]

2

Agenda

•Global Thinking

•Global Opportunities

•Global Challenges

• From Global Vision to Local Action

•Managing Across Borders

• Selecting Global Managers

•Training and Development

•HR Management vs HR Strategy

• Systematic Focus Strategy

•Case 1: Best Buy

•Case 2: Marriott

3

Global Thinking

“No senior corporate executive should be promoted

to a position of leadership if he/she does not

demonstrate the ability to think globally”

Salah Hassan and Roger Blackwell

4

Global Thinking

Dimensions Practical Results

Understanding sources of demand

How to market to worldwide buyers

Understanding sources of supply

How to source globally & more effectively

Understanding the other point of view

and value system

How to add value and market effectively

and efficiently

5

Global Opportunities

•Economies of scale

•Market scope

•Brand leadership

•Universal brand image

• Leverage ideas globally

•Uniformity of HR Strategy

6

Global Challenges

•Cultural Differences

•Differences in HR development

•Unique talent pools and skill sets

•Economic growth & competitive environment

•Communication differences

7

Local Vs. Global Markets: Key Differences

Local Global

Markets are defined within country borders. Customers and competitors are of local origin

Significant differences exist among customers from different countries; segments are defined locally

Competition takes place among primarily local firms; even international companies compete on a country-by-country basis

Each local market operates in isolation from the rest; competitive actions in one market have no impact elsewhere

Strategies are locally based: little advantage exists in coordinating activities among markets

Markets transcend country borders. Customers and/or competitors cross frontiers to buy and sell

Significant similarities exist among customers from different countries: segments cut across geographic frontiers

Competitors are few and present in every major market: Rivalry takes on regional or global scope

Local markets operate independently: Competitive actions in one market impact other markets

Strategies are regional or global in scope: Great advantage exists in coordinating activities within regions or worldwide

Market

Boundaries

Customers

Competition

Inter-

dependence

HR Strategies

8

From Global Vision to Local Action

Concerned with losing competitiveness worldwide, Executive VP announces a major campaign of rationalization labeled the 5% program

Regional director for Europe targets harmonization of products and marketing strategies across the continent. Objectives: To reduce duplication and centralize Production of standardized products in “Euro-plants”

Area director for Northern Europe leads a task force for the region rationalized product and brand policies

A :Strategic Committee” of country managers agrees to let product group managers decide the specifics of product/brand rationalization and harmonized marketing strategies

Product group managers decide on reduced product diversity and prepare local action plans that incorporate standardized brands, packaging, product formulation, positioning, etc…

President

Executive Vice President

Area Director (Northern Europe)

Area Director (Southern Europe)

General Manager Benelux

General Manager

Scandinavia

General Manager

UK

Product Group

Marketing Managers

Product Group

Marketing Managers

Product Group

Marketing Managers

Regional Director (Europe)

Other Regional Directors

© 2010 South-Western, a part of Cengage Learning. All rights reserved.

Managing Across Borders

• Global corporation

Firm that has integrated

worldwide operations

through a centralized

home office.

• International corporation

Domestic firm that uses its

existing capabilities to

move into overseas

markets.

• Transnational corporation

Firm that attempts to

balance local responsiveness

and global scale via a

network of specialized

operating units.

• Multinational corporation

(MNC)

Firm with independent

business units operating in

multiple countries.


Types of Organizations


Increasing Importance of Understanding

Global Human Resources Management

International

Mergers and

Acquisitions

Global Human

Resources

Management

Foreign Human

Resources

Global

Competition

Market Access

Opportunities


How International Companies Affect

the World Economy

•Their production and distribution extend

beyond national boundaries, making it easier to

transfer technology.

•They have direct investments in many

countries, affecting the balance of payments.

•They have a political impact that leads to

cooperation among countries and to the

breaking down of barriers of nationalism.


How Does the Global Environment Influence

Management?

•Unified Economies

Closely partnered nations such as the European

Union (EU) have developed into strong competitors.

Promotes job growth in trading nations.

•Cultural Environment

The communication patterns, religion, values and

ideologies, education, and social structure of a host

country influence how HR is conducted in that

country.


Cultural Environment of International Business


Domestic versus International HRM

• Issues in international HRM in helping

employees adapt to a new and different

environment outside their own country:

Relocation

Orientation

Translation services


International Staffing

•Expatriates, or Home-country Nationals

Employees from the home country who are on

international assignment.

•Host-country Nationals

Employees who are natives of the host country.

•Third-country Nationals

Employees who are natives of a country other than

the home country or the host country.


Changes in International Staffing over Time


Hiring Host-Country Nationals

• Advantages:

1. Hiring local citizens is generally less costly than

relocating expatriates.

2. Since local governments usually want good jobs

for their citizens, foreign employers may be

required to hire locally.

3. Most customers want to do business with

companies they perceive to be local versus

foreign.


Recruiting Internationally

•Work Permit, or Visa

Government document granting a foreign individual

the right to seek employment.

•Guest Workers

Foreign workers invited to perform needed labor.

•Apprenticeships

Vocational training programs in skilled trades.

•Transnational Teams

Teams composed of members of multiple

nationalities working on projects that span

multiple countries.


Selecting Global Managers

•Global Manager

A manager equipped to run an international

business

•Skills Categories for Global Managers

Ability to seize strategic opportunities

Ability to manage highly decentralized

organizations

Awareness of global issues

Sensitivity to issues of diversity

Competence in interpersonal relations

Community-building skills


Comparison of Advantages in Sources of Overseas Managers


Selecting Global Managers

1. Begin with self-selection.

2. Create a candidate pool.

3. Assess core skills.

• Skills considered critical

to an employee’s success

abroad.

4. Assess augmented skills

and attributes.

• Skills helpful in facilitating

the efforts of expatriate

managers


Skills of Expatriate Managers

CORE SKILLS

Experience

Decision-making

Resourcefulness

Strategic thinking

Adaptability

Cultural sensitivity

Change management

Team building

Maturity

AUGMENTED SKILLS

Technical skills

Negotiation skills

Strategic thinking

Delegation skills

Change management


Expatriate Selection Criteria


Training and Development

•Essential training program content to prepare

employees for working internationally:

Language training

Cultural training

Assessing and tracking career development

Managing personal and family life

Repatriation

•Culture shock

Perpetual stress experienced by people who settle

overseas.


Training Methods

•Reviewing available information about the host

company: books, magazines, video tapes.

•Conversations with host country natives.

•Sensitivity training to become familiar with the

customs and overcome prejudices.

•Temporary assignments to encourage shared

learning.


Assessing and Tracking Career Development

•Developmental and Career Advantages of an

International Assignment:

Increases the expatriate’s responsibilities and

influence within the corporation

Provides a set of unique experiences beneficial to

both the individual and the firm

Enhances understanding of the global marketplace

Offers the opportunity to work on a project

important to the organization


Global Compensation Challenges

•Different countries have different norms for

employee compensation:

Financial (money) incentives versus nonfinancial

incentives (prestige, independence, and influence)

Individual rewards versus collectivist concerns for

internal equity and personal needs

General rule:

Match the rewards to the values of the local culture—create

a pay plan that supports the overall strategic intent of the

organization but provides enough flexibility to customize

particular policies and programs to meet the needs of

employees in specific locations.


Hourly Wages in Different Countries*

*Hourly compensation costs in U.S. dollars for production workers in manufacturing.

COUNTRY $/HOUR

Norway 41.05

Denmark 35.45

Germany 34.21

Netherlands 32.34

Belgium 31.85

Sweden 31.80

Switzerland 30.67

Austria 30.46

Finland 29.90

Luxembourg 27.74

United Kingdom 27.10

Australia 26.14

Ireland 25.96

Canada 25.74

Italy 25.07

France 24.90

United States 23.82

COUNTRY $/HOUR

Japan 20.20

Spain 18.83

Greece 16.10

Korea, Republic of 14.72

New Zealand 14.47

Israel 12.98

Singapore 8.55

Portugal 7.65

Czech Republic 6.77

Taiwan 6.43

Hungary 6.29

Hong Kong SAR (1) 5.78

Poland 4.99

Brazil 4.91

Mexico 2.75

Philippines 1.07

Sri Lanka 0.54


Compensation of Host-Country Employees

• Hourly wages can vary dramatically from

country to country.

• Pay periods are different.

• Seniority may be an important factor.

• High pay rates can upset local compensation

practices.

• Bonuses, profit-sharing, benefits and paid

leave may be more extensive and legally

required.


Compensation of Host-Country Managers

• Global Compensation System

A centralized pay system whereby

host-country employees are

offered a full range of training

programs, benefits, and pay

comparable with a firm’s

domestic employees but adjusted

for local differences


Compensation of Expatriate Managers

• An effective international compensation program must:

1. Provide an incentive to leave the United States

2. Allow for maintaining an American standard of living

3. Provide for security in countries that are politically unstable or

present personal dangers

4. Include provisions for good health care

5. Reimburse the foreign taxes the employee is likely to have to pay (in

addition to having to pay domestic taxes) and help him or her with

tax forms and filing

6. Provide for the education of the employee’s children abroad, if

necessary

7. Allow for maintaining relationships with family, friends, and

business associates via trips home and other communication

technologies

8. Facilitate the expatriate’s reentry home

9. Be in writing


Expatriate Compensation Systems

• Home-Based Pay

Pay based on an expatriate’s home country’s

compensation practices

• Balance-Sheet Approach

A compensation system designed to match the

purchasing power in a person’s home country

1. Calculate base pay

2. Figure cost-of-living allowance (COLA)

3. Add incentive premiums

4. Add assistance programs


Expatriate Compensation Systems (cont’d)

•Split Pay

A system whereby expatriates are given a portion of

their pay in the local currency to cover their day-to-

day expenses and a portion of their pay in their

home currency to safeguard their earnings from

changes in inflation or foreign exchange rates

•Host-Based Pay

Expatriate pay is comparable to that earned by

employees in a host country to which the expatriate

is assigned.


Expatriate Compensation Systems (cont’d)

•Localization

Adapting pay and other compensation benefits to

match that of a particular country

Reduces resentment among local staff members if

they are earning significantly less.

•Other Issues

Adequacy of medical care

Personal security

Compensation policies of competitors


Performance Appraisal

of International Managers

•Who Should Appraise Performance?

Home-country evaluations

Host-country evaluations

•Adjusting Performance Criteria

Augmenting job duties

Individual learning

Organizational learning

•Providing Feedback

Debriefing interview


The Labor Environment Worldwide

• International Differences in Unions:

The level at which bargaining takes place (national,

industry, or workplace)

The degree of centralization of union-management

relations

The scope of bargaining (parties and issues)

The degree to which government intervenes

The degree of unionization and union strength

The political affiliations of unions

38

HR Management vs. Strategy

HR Strategy

HR Management

Proactive, Long-Term Reactive, Short-Term Focus

Strategic HR Leadership

Tactical HR Management

Approach

Promises & Values Skills & Procedures Drivers

How the brand interacts with the marketplace

What the corporation does in the marketplace

Orientation

Development Hiring Interest

What matters to the

market

What matters to the company

What Matters

Think Globally, Act Locally Market presence first and foremost

Thinking

Differences & Similarities Considered

Blurred view of differences

Views & Values

BEST PRACTICES

Company Overview

Best Buy is a specialty retailer of consumer

electronics, home-office products, entertainment

software, appliances and related services.

Corporate Vision

Making life fun and easy. For example, Best Buy

want to help customers find the entertainment

technology that best meets their needs and that

will integrate with their existing entertainment

system to maximize their enjoyment.

Company Overview

Best Buy business strategy

is to bring technology and consumers together in a retail environment that focuses on educating consumers on the features and benefits of technology and entertainment products, while maximizing overall profitability

Best Buy's corporate values

Best Buy has four values that guide Best Buy actions:

• Have fun while being the best,

• Learn from challenge and change,

• Show respect, humility and integrity, and

• Unleash the power of Best Buy people.

Reorganize around aligning the

Employee with the Customer

•Best Buy: Case Study on Customer Centricity

Created five customer group personas

Customized existing stores to cater to specific

customer groups

Centric system for training employees

Created niche stores for customer groups

Source: The Washington Post

From Managing Product to Managing People

Best buy Segmentation

Best Buy Employees

Best Buy Employee Training

Best Buy Market Share

Systematic Focus Strategy

To align your corporate value proposition with the interaction between the internal and external customers to create a brand with distinctive

personality that fulfills its promise.

© 2014 Dr. Salah S. Hassan, Ph.D.. All rights reserved.

Internal Customers

Value Proposition

External Customers

Making the Brand’s Personality Distinctive

MARKET REALITIES

HR Strategies

The HR strategy for a firm reflects the number

and nature of common or distinctive

characteristics of internal as well as external

customers applied to the portfolio of offerings

across a given marketplace.

The Marriott Case

Marriott Offerings Value Proposition

Ritz Carlton

Personalized service & prestige

Marriott Hotels

& Resorts

Upscale, premium, fine dining

Courtyard by

Marriott

For business travelers

Fairfield by

Marriott

Consistent quality, continental

breakfast

http://www.ritzcarlton.com/home.asp

http://www.marriott.com/



http://www.marriott.com/

The Value Proposition

What is the value

proposition?!

The Value Proposition

Building loyalty

through

“Passion for Service”!

Ladies and Gentlemen Serving and Gentlemen

Dr. Salah S. Hassan, Ph.D.

Professor of Strategic Brand Management

The George Washington University

[email protected]

Documents

Dr. Hassan HR Management and the Corporate Brand