Global Market HRM

8/12/2019 Global Market HRM

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Managing Human ResourcesGlobally

After reading this chapter, you should be able to:

Identify the recent changes that have caused companies

to expand into international markets.Discuss the four factors that most strongly influence

HRM in international markets.

Chapter

15


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Managing Human Resources

Globally

List the different categories of international employees.

Identify the four levels of global participation and the

HRM issues faced within each level.Discuss the ways companies attempt to select, train,

compensate, and reintegrate expatriate managers.

15Chapter


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Introduction

Organizations now function in a global economy.

International expansion can provide a competitive

advantage:

Entering different countries may provide large numbers ofpotential customers.

Building production facilities in countries with low-cost labor

may prove cost-efficient.

MaquiladoraplantsThe rapid increase in telecommunications and information

technology enables work to be done more rapidly, efficiently,

and effectively around the globe.


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Current Global Changes

European Economic Community

North American Free Trade

Agreement

The Growth of Asia

Japan, China, Singapore, Hong Kong,

and Malaysia are significant economic

forces.

General Agreement on Tariffs and

Trade (GATT)


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Factors Affecting HRM inInternational Markets

Human Resource

Management

Culture

Political-Legal

System

Education -

Human Capital

Economic

System


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Hofstedes Cultural Dimensions

Individualism/collectivism - the degree to which peopleact as individuals rather than as members of a group.

Power distance - how a culture deals with hierarchicalpower relationships.

Uncertainty avoidance - how cultures deal with the factthat the future is not perfectly predictable.

Masculinity-femininitydescribes the division of rolesbetween the sexes within a society.

Long-term/short-term orientation - the tendency of aculture to focus on long-term benefit or short-termoutcomes.


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Implications of Culture for HRM

Cultures differ on such things as

leadership, decision-making, and

motivation.

Cultures influence the appropriateness ofHRM practices.

Cultures may influence compensation

systems.

Cultural differences can affect thecommunication and coordination

processes in organizations.


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Education/Human Capital

Countries differ in their levels of human capital.

A country's human capital is determined by a

number of variables, primarily, educational

opportunity.

Countries with low human capital attract facilities

that require low skills and low-wage levels.

Countries with high human capital are attractive

sites for direct foreign investment that creates high-

skill jobs.


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Political/Legal System

Dictates the requirements of certain HRM practices, such astraining, compensation, hiring, firing, and layoffs.

The legal system is an outgrowth of the culture, reflectingsocietal norms.

United States has led the world in eliminating discriminationin the workplace and controlling the process of labormanagement negotiations.

Germany has provided employees with a legal right to

"codetermination" in the workplace.The EEC provides for the fundamental social rights of

workers: freedom of movement and freedom to choose one'soccupation and be fairly compensated.


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Economic System

Under socialist economies, there is

little economic incentive to develop

human capital, but ample opportunity

exists because education is free.In capitalist systems, the opposite

situation exists, with higher tuition at

state universities but economicincentives exist through individual

salaries


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Types of International Employees

A parent countryis the country in which the

company's corporate headquarters is located.

A host countryis the country in which the parent

country organization seeks to locate (or has alreadylocated) a facility.

A third country is a country other than the host

country or parent country.

An expatriateis an employee sent by a company in

one country to manage operations in a different

country.


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Levels of Global Participation

Increasing Participation in Global Markets

Parent

Country

Host

Country

Domestic International Multinational Global

Foreign

subsidiary

Corporate

headquarters

Corporate

headquarters

Corporate

headquarters

Corporate

headquarters

Foreign

subsidiary

Foreign

subsidiary

Foreign

subsidiary

Foreign

subsidiary


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Global Organizations

Global organizations compete on state-of-the-art, top-

quality products and services with the lowest possible costs.

Transnational scoperefers to the fact that HR decisions must

be made from a global rather than a national or regional

perspective.

Transnational representation reflects themultinational

composition of a company's managers.

Transnational processrefers to the extent to which the

company's planning and decision-making processes include

representatives and ideas from a variety of cultures.


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Selection of Expatriate Managers

Successful expatriates have the following skills or abilities:

Technical competence

Ability to adjust to, and be sensitive to, a new culture. Three

dimensions include:

the self dimension

the relationship dimension

the perception dimension

Use of women in expatriate assignments has provenbeneficial for companies; recent evidence disproves the

notion that women are not successful managers in foreign

countries.


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Compensation of Expatriates

Total pay packages have four

components:

Base SalaryAnnual salary, unadjusted.

Tax Equalization allowances

Paymentsfor higher tax rates of other countries.

BenefitsContinuation of, or substitute

for, home benefits.

AllowancesCost-of-living, housing,

education, and relocation payments.


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Reacculturation of Expatriates

Reentry to the home organization may result in culture

shock.

According to some sources, 60 to 70 percent of expatriates do

not know what their position will be upon their return.

Transition process necessitates communication of corporate

changes while the expatriate is overseas and validation of

the importance of the expatriate's international work.

Documents

Global Market HRM