IBUS 618 Dr. Yang1 Chapter 4 Staffing International Operations for Sustained Global Growth

IBUS 618 Dr. Yang 1

Chapter 4

Staffing International Operations for Sustained Global Growth

IBUS 618 Dr. Yang 2

Chapter Objectives

Issues related to various approaches to staffing foreign operations;

Reasons for using international assignments: position filling, management development, and organizational development;

(cont.)

Issues related to various approaches to staffing foreign operations;

Reasons for using international assignments: position filling, management development, and organizational development;

(cont.)

The previous two chapters have concentrated on the global environment and organizational contexts. We now focus on the managing people aspect. The aim is to establish the role of HRM in sustaining international business operations and growth. We will cover the following:

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Chapter Objectives (cont.)

Various types of international assignments: Standard assignments: Short-term, extended, and longer-term; Non-standard arrangements: Commuter, rotator, contractual,

and virtual.

The role of expatriates and non-expatriates in supporting international business activities (Flexpriates)

The role of inpatriates in the corporate global strategy Return on investment of international assignments The role of the corporate HR functions

Various types of international assignments: Standard assignments: Short-term, extended, and longer-term; Non-standard arrangements: Commuter, rotator, contractual,

and virtual.

The role of expatriates and non-expatriates in supporting international business activities (Flexpriates)

The role of inpatriates in the corporate global strategy Return on investment of international assignments The role of the corporate HR functions

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Approaches to Staffing

General staffing policy on key positions at headquarters and subsidiaries

Ethnocentric

Polycentric

Geocentric

Regiocentric Constraints placed by host government Staff availability

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Ethnocentric

Strategic decisions are made at headquarters;

Limited subsidiary autonomy; Key positions in domestic and foreign

operations are held by headquarters’ personnel;

PCNs manage subsidiaries.

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Polycentric

Each subsidiary is a distinct national entity with some decision-making autonomy;

HCNs manage subsidiaries who are seldom promoted to HQ positions;

PCNs rarely transferred to subsidiary positions.

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Regiocentric

Reflects a regional strategy and structure; Regional autonomy in decision making; Staff move within the designated region,

rather than globally; Staff transfers between regions are rare.

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Geocentric

A global approach - worldwide integration; View that each part of the organization

makes a unique contribution; Nationality is ignored in favor of ability:

Best person for the job; Color of passport does not matter when it

comes to rewards, promotion and development.

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Staffing a New International Venture

An Australian wine company has successful and growing exports in three markets: U.K., U.S., and Scandinavia;

Gained a global recognition for quality wine;

Assisted by technological improvements, and aggressive marketing;

Now the Board wants the company to “ride the Australian wave” and gain more market shares in the European continent.

An Australian wine company has successful and growing exports in three markets: U.K., U.S., and Scandinavia;

Gained a global recognition for quality wine;

Assisted by technological improvements, and aggressive marketing;

Now the Board wants the company to “ride the Australian wave” and gain more market shares in the European continent.

The company recently made an acquisition in France, its first time FDI:

Which is a middle-level player in the Fench home market;

With efficient operation in the French context;

Modest profit margin; Limited sales to EU

neighboring countries; The Broad believes there is

room for improvement particularly in production techniques and marketing

The company recently made an acquisition in France, its first time FDI:

Which is a middle-level player in the Fench home market;

With efficient operation in the French context;

Modest profit margin; Limited sales to EU

neighboring countries; The Broad believes there is

room for improvement particularly in production techniques and marketing

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How would you staff the new venture?

Staffing approaches to consider?

Key positions to be filled: Managing Director, head

of the new venture Production Manager Marketing Manager Chief wine Technologist HR Manager Chief Finance Manager

Factors to consider: Strategic goal Mode of entry Degree of control French culture and

labor law EU works council Competence transfer Brands, the “Australian

wave”


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Table4-1a Advantages and Disadvantages of Using PCNs


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Table4-1b

Advantages and Disadvantages of Using TCNs


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Table4-1c

Advantages and Disadvantages of Using HCNs


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Determinants of Staffing ChoicesFigure4-1


Reasons for International Assignments

Position filling, e.g. Skills gap, launch of new endeavor,

technology transfer Management development

Training and development purposes, assisting in developing common corporate values

Organizational development Need for control, transfer of knowledge,

competence, procedures and practices


Types of International Assignments

Short term: up to 3 months Troubleshooting Project supervision A stopgap until a permanent arrangement is found

Extended: up to 1 year May involve similar activities as short-term

assignments

Long term Varies from 1 to 5 years The traditional expatriate assignment


Non-standard Assignments

Commuter assignments

Rotational assignments

Contractual assignments

Virtual assignments

Some of these arrangements assist in overcoming the high cost of international assignments but are not always effective substitutes for the traditional expatriate assignment.

Some of these arrangements assist in overcoming the high cost of international assignments but are not always effective substitutes for the traditional expatriate assignment.


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Table4-2

Differences between Traditional and Short-term Assignments


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The Roles of an ExpatriateFigure4-2


The Role of Non-expatriates

People who travel internationally yet are not considered expatriates as they do not relocate to another country Road warriors, globetrotters, frequent fliers

Much of international business involves visits to foreign locations, e.g. Sales staff attending trade fairs Periodic visits to foreign operations, subcontractors, etc. Meeting with foreign agents, clients, distributors, suppliers,

etc.


A Glamorous Life

International business travelers cite the positives as: Excitement and thrills of conducting business

deals in foreign locations Life style (top hotels, duty-free shopping,

business class travel) General exotic nature


But a High Level of Stress!

Home and family issues Frequent absence and separation

Work arrangements Domestic side of position still has to be attended to

Travel logistics Waiting in airports, etc.

Health concerns Poor diet, lack of sleep, etc.

Host culture issues Limited cultural training, lack of backup support


The Role of Inpatriates

As both knowledge senders and receivers Share their local contextual knowledge with

the HQ staff Socialize in the HQ corporate culture and

learn firm-specific routines and behaviors Increasing the capabilities of organizations

to “think global and act local”


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ROI Indicators for Calculating Intl Assignments

Figure4-3


Steps to Calculate Expatriate ROI

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1. Identify financial and non-financial costs and benefits.

2. Link the costs and benefits to the purpose of the long-term assignment.

3. Identify the appropriate antecedents from a system’s perspective.

4. Conduct the calculation at an appropriate time within the context of the assignment’s purpose.


The Role of the Corporate HR Function

Can we manage our people like a global product, e.g., the feasibility of: The concept of a global internal labor

market Standardization of work practices and

HR activities What HR matters require central control

and what can be decentralized?


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Table4-3 Various roles of corporate HR


Current Trends and Shifts in International Assignments

Categories Types of the Assignments

Expected Assignment Duration

1-3 years (52%) 53%

Permanent 20%

Short-term (9%) 27%

Under 6 months 13%

6 months to1 year 14%

Assignment completion

On schedule 58%Extended 31%

Less time 11%

Companies Seeking Alternative Mobility Models

Localization 57%

Hiring HCNs 48%

One way move 26%

Short-term 39%

Business travel 36%

Source: adapted from Global Relocation Trends, GMAC-GRS 2002, 2005.


Chapter Summary

Looked at the various approaches to staffing international operations – ethnocentric, polycentric, geocentric and regiocentric – examining their advantages and disadvantages and factors that may determine the choice of these options.

Considered the reasons for using international assignments: position filling, management development and organization development.

(cont.)

Looked at the various approaches to staffing international operations – ethnocentric, polycentric, geocentric and regiocentric – examining their advantages and disadvantages and factors that may determine the choice of these options.

Considered the reasons for using international assignments: position filling, management development and organization development.

(cont.)

This chapter has expanded on the role of IHRM in sustaining international business operations. We have:


Chapter Summary (cont.)

Discussed the various types of international assignments: short, extended and long-term (traditional); and non-standard forms such as commuter, rotational, contractual and virtual assignments.

Examined the various roles of the expatriate: as an agent for direct control, as an agent for socialization, as network builders, as boundary spanners and as language nodes. These various roles of the expatriate help to explain why expatriates are utilized and illustrates why international assignments continue to be an important aspect of international business from the organization’s perspective. (cont.)

Discussed the various types of international assignments: short, extended and long-term (traditional); and non-standard forms such as commuter, rotational, contractual and virtual assignments.

Examined the various roles of the expatriate: as an agent for direct control, as an agent for socialization, as network builders, as boundary spanners and as language nodes. These various roles of the expatriate help to explain why expatriates are utilized and illustrates why international assignments continue to be an important aspect of international business from the organization’s perspective. (cont.)


Chapter Summary

Recognized that non-expatriates and inpatriate are also critical to international business operations.

International business travellers present their own challenges, such as the effect of frequent absences on family and home life, the possible negative health effects and other stress factors.

Pointed out the importance to control costs and develop metrics to measure expatriate return on investment (ROI).

Looked at the role of the corporate HR function as the firm grows internationally, building on sections from Chapters 1 and 2.

Recognized that non-expatriates and inpatriate are also critical to international business operations.

International business travellers present their own challenges, such as the effect of frequent absences on family and home life, the possible negative health effects and other stress factors.

Pointed out the importance to control costs and develop metrics to measure expatriate return on investment (ROI).

Looked at the role of the corporate HR function as the firm grows internationally, building on sections from Chapters 1 and 2.


Discussion Questions

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1. Outline the main characteristics of the four approaches to international staffing.2. Which factors determine the choice of a staffing approach? Would a MNE choose

the same staffing approach worldwide? Place your arguments in the context of the model outlining determinants of staffing choices and pros and cons of using PCNs, TCNs, and HCNs.

3. What are the reasons for using international assignments?4. What is the role of inpatriates? Do inpatriates guarantee a geocentric staffing

policy?5. Why is it important to measure return on investment of international assignments?

Which indicators can be used?6. As a newly appointed Project Manager of a research team, you consider that you

will be able to manage the project virtually from your office in London, even though the other six members are located in Munich. This will solve your personal dilemma as your family does not want to be relocated. The project has a six-month deadline. What factors should you need to consider in order to make this virtual assignment effective?

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IBUS 618 Dr. Yang1 Chapter 4 Staffing International Operations for Sustained Global Growth