INTERNATIONAL HUMAN RESOURCE MANAGEMENT …bms.lk/download/GDM_Tutorials/batch-37/MP/week 1/International... · international HRM issues ... Hong Kong managers in between. The Global

INTERNATIONAL HUMAN RESOURCE MANAGEMENT

Graduate Diploma In Management

Managing People

Jeeshan Mirza

Overview• The Global Environment

• Managing Across Borders

• The Labor Environment Worldwide




The Global EnvironmentGlobal Trends Affecting HRM

The Global Environment

▷ Globalization- Trend toward opening up foreign markets to international trade and investment

▷ Businesses increasingly looking abroad for opportunities

▪ Expand business, explore new opportunity

▪ Tap into HR capabilities

▪ Access resources scarce in home country


Tap Into HR

Explore New Opportunities

Access Scarce Resource


What Is Propelling The Growth?

▷ Free trade, opening up of borders, economies

▷ Growth of service based industry

▷ Emergence of information technology



▷ Going abroad-employers must address international HRM issues

▷ Dealing with global HRM challenges isn’t easy

▷ Employer faces political, social, legal, and cultural differences among countries abroad

▷ What works in one country may not work in another


▷ Company operating has to adapt to varying business environments

▷ Adapt personnel policies and procedures to the differences among countries

▷ Complicates human resource management in multinational companies


Global DifferencesLegal Differences

▷ Country’s labor laws, property rights, and patents

▷ Employers have to be familiar with labor law systems of new countries

▷ Eg. Lincoln Electronics, EU Work Councils, India, Brazil, France 35 Hour Work Week, 2.5 Days Leave Per Month, Co-Determination Germany


Global DifferencesEconomic System Differences

▷ Market

▪ Government will play restrained role in policy

▷ Mixed

▪ Government will look to influence policy while balancing needs of the market



▷ Capitalist Vs Socialist System

▷ Labor costs vary depending on economic progress, costs in a country

▪ Hourly compensation costs for production workers ▪ $2.92 in Mexico, $6.58 in Taiwan, $24.59 in United

States, $29.73 in United Kingdom, and $37.66 in Germany



2006, Apollo Hospital Enterprise Ltd, (AHEL) sold off their 33.22 per cent stake in the company, accepting Jayawardene's offer of SLRs 28 per share according the Colombo Stock Exchange's Take Over and Mergers Code of 1995.




Global DifferencesCultural Differences

▷ Communications, religion, values and ideologies, education, and social structure of a country

▷ Cultural differences-people abroad react differently to the same or similar situations

▪ Eg, U.S. managers were most concerned with getting job done, Chinese managers with maintaining harmonious environment, Hong Kong managers in between


Global Differences

Source: Snell, Bohlander

Cultural Environment Of International Business



▷ Hofstede’s Cultural Framework

▪ Power Distance

▪ Individualism Vs Collectivism

▪ Masculinity Vs Femininity

▪ Uncertainty Avoidance

▪ Long Term Orientation



https://geert-hofstede.com/sri_lanka.html


Global DifferencesCultural Differences-Implications

▷ Influences ways members of an organization behave toward one another

▷ Their attitudes toward various HRM practices

▷ Cultures differ in their opinions on how managers should lead, decisions should be handled, what motivates employees



▷ Compensation tied to individual performance fairer, more motivating in individualist culture

▷ Culture favoring individualism accepting of pay differences; highest- and lowest-paid employees

▷ Collectivist cultures tend to have much flatter pay structures; entitlement based approach



▷ In collectivist cultures, people tend to value group decision making, collaborate heavily

▷ High power distance cultures can impede empowerment

▷ Communication problems, conflict common between individualist and collectivist culture



▷ Hiring-selection techniques, interview process

▷ Training and performance appraisal; western managers more direct

▷ Promotion decisions; Japan often based on entitlement, seniority over merit

▷ Disciplining of employees




Managing Across BordersCompeting Internationally

Managing Across Borders


Types Of International Organizations


International Staffing▷ Expatriates-noncitizens of the countries in which

they are working

▪ An Indian or Sri Lankan national working in MAS Holdings factory in Bangladesh

▷ Expatriates also home-country nationals, citizens of country where company headquartered

▪ A Sri Lankan national working in MAS Holdings factory in Bangladesh


International Staffing▷ Locals also known as host-country nationals;

citizens of the countries where company has launched its operation

▪ A Bangladeshi national working in MAS Holdings factory in Bangladesh

▷ Third-country nationals citizens of a country other than the parent or host country—

▪ French executive working in the Shanghai branch of a U.S. multinational bank


International Staffing▷ Most corporations use all three for staffing their

multinational operations

▷ Decision could be influenced by

▪ Corporate strategy

▪ Host country laws and regulations

▪ Costs, macro factors, local market factors


International StaffingStrategic Approaches To International Staffing

Source: Mathis


International StaffingWhy Hire Expats?

▷ Employers often can’t find local candidates with the required technical qualifications

▷ Ensure control over subsidiary

▷ Implement head quarters policies, culture, way of doing things

▷ Successful stint abroad-required step in developing top managers


International StaffingWhy Hire Locals?

▷ Legal restrictions in bringing expatriates

▷ Local government may encourage hiring of its citizens; transfer of knowledge, skill, technology to economy

▷ Expatriates are expensive- generous salary, vehicle, accommodation, relocation cost, family expenses, visa, airfare, perks


International StaffingWhy Hire Locals?

▷ Local citizens know the cultural and political landscape of the country

▷ More likely to be able to gain the support of local staff members

▷ Most customers want to do business with companies (and people) they perceive to be local versus foreign


International StaffingChanges In International Staffing Over Time



Selecting Global Managers▷ Screening managers for jobs abroad is similar to

domestic jobs

▷ However for foreign assignments, family and cultural adaptability important

▷ Candidate should be able to adapt to culture of host country

▷ Technical competence, experience in home country not enough


Selecting Global Managers▷ Six skill categories for the global manager

▪ The ability to seize strategic opportunities

▪ The ability to manage highly decentralized organizations

▪ An awareness of global issues

▪ Sensitivity to diversity issues

▪ Competence in interpersonal relations

▪ Community-building skills


Selecting Global Managers▷ Successful expatriate employees tend to be

extroverted, agreeable, and emotionally stable individuals

▷ Inversely related to the expatriate’s desire to terminate the assignment

▷ Cultural difference is not the problem, the persons ability to adjust is


Selecting Global ManagersComparisons In Sources Of Overseas Managers



Selecting Global ManagersExpatriate Adjustment Factors



Selecting Global ManagersWhy Expatriate Assignments Fail

▷ Usually not technical or cultural factors but family and personal ones


Training International EmployeesOrienting & training employees on international assignment

▪ Social and business etiquette▪ History and folklore▪ Current affairs, relations with host/home country,

political structure and current players ▪ Cultural values and priorities▪ Geography, major cities▪ Religion and the role of religion in daily life▪ Currency, transportation, time zones, and hours of

business▪ The language


Training International EmployeesOngoing Training

▷ Language, non verbal communication training

▷ Cultural and adaptation training

▪ Pepsico- Latin Dancing in Mexico, Ping Pong/Table Tennis in China

▷ Training employees abroad-extending parent company’s training


Training International Employees














Culture Clusters


International CompensationCompensation Of Host Country Employees

▷ Influenced largely by market rates, economy

▷ Payment mechanism differs country to country-hourly, day, piece

▷ Determining pay rate influenced by culture Eg. Japan

▷ Semi annual or annual lump sum payment


International CompensationCompensation Of Host Country Employees

▷ Employee benefits ranges from country to country

▷ France, benefits higher proportion of compensation

▷ US, UK-10 Days Paid Leave, France, Netherlands-25, Sweden, Austria-30


International CompensationCompensation Of Host Country Managers

▷ Traditionally based on host country salary levels

▷ Global compensation system- centralized pay system

▷ Host-country employees offered full range of training programs, benefits, and pay

▷ Comparable with a firm’s domestic employees but adjusted for local differences


International CompensationCompensation Of Host Country Managers

▷ Global compensation system becoming more common

▷ People becoming more mobile across borders

▷ Transnational teams, projects

▷ MNC’s in US hiring Indians, Chinese from American Universities, relocating them


International CompensationCompensation Of Expatriate Managers

▷ Must be an incentive for the manager to leave the home country

▷ Provisions need to be provided for miscellaneous expense-health, relocation, family, tax, travel

▷ For short term project based assignments, managers given per diem in addition to normal compensation



For longer duration stints:

▷ Home based pay- pay based on expatriate’s home country’s compensation practices

▷ Balance sheet approach- match the purchasing power in a person’s home country

▷ Split pay, host based pay



▷ Cement giant Cemex pays 10% extra salary for foreign service

▷ On top of this: Hardship Premium (Depends on Country; Easy Posting To Challenging)

▷ Housing, Children's Schooling, Air Tickets For Family, Spouse Language Lessons, Take Out Consequences Of Local Tax

▷ An executive normally 150,000 USD would cost 300,000 as an expat


Performance Appraisal Who Does The Appraisal?

▷ Local management must have some input

▷ Cultural differences may distort the appraisals Eg. Peruvian boss and US expatriate manager

▷ Home office manager may not be able to provide valid appraisal


Performance AppraisalWho Does The Appraisal?

▷ Multi-rater or 360 degree appraisal popular amongst global firms

▷ Also challenging where an expat manager has to appraise local employees, provide feedback

▷ May have to adapt performance criteria to suit expatriate and domestic employee


Performance AppraisalOther Aspects

▷ Performance measures may also vary from one country to another

▷ In countries with rapidly changing circumstances, organizational, team, individual plans may have to be updated

▷ Employees respond to performance feedback different ways; Eg USA Vs Mexico


Repatriation▷ Process of transition for an employee home from

an international assignment

▷ 40% to 60% of expats will probably quit within 3 years of returning home

▷ 3-year assignment with $100,000 base salary may cost employer $1 million-living costs, family, transport

▷ Given investment, sensible to do everything to keep them with the firm


Repatriation▷ Re-acclimate the repatriated employee

▷ Proper career development program

▷ Responsibilities of employee must not be diminished, career must advance

▷ Companies should fully utilize the knowledge, understanding, and skills developed on their assignments


Implementing Global HR System▷ Companies increasingly relying on local rather

than expatriate employees

▷ Transferring selection, training, appraisal, pay, and other human resource practices abroad is a top priority

▷ Institute a standardized human resource management system in its facilities around the world, with some country specific issues




The Labor Environment Worldwide

How Labor Relations Differ Across The World


▷ Labor environment plays key role in international business and HR decisions

▷ Wages and benefits vary dramatically across the world as do safety, other legal regulations

▷ In many countries, regulation of labor contracts is profound and extensive

▷ Labor unions around the world differ significantly


▷ EU prohibits discrimination against workers in unions

▷ In many countries in Central America and Asia, labor unions are illegal

▷ In Japan, Germany, New Zealand, UK, unions losing some of their power

▷ Union power to gain high wages, enforce rigid labor rules blamed for hurting competitiveness


▷ EU countries have legal provisions for employee representation

▷ Safety and hygiene committees, worker councils, or even boards of directors

▷ In France, employers with 50 plus employees must consult with employees’ representatives

▷ Matters including working conditions, training, and profit-sharing plans, and layoffs

Lets Test Your Knowledge

▷ List 5 Large Or Reputed French Companies?

Thanks!Any questions?

You can find me at:@[email protected]

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INTERNATIONAL HUMAN RESOURCE MANAGEMENT …bms.lk/download/GDM_Tutorials/batch-37/MP/week 1/International... · international HRM issues ... Hong Kong managers in between. The Global