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International Human Resource Managment
Human Resource Management (HRM)
Refers to the activities an organization carries out to use its human resources effectively
Four major tasks of HRM A) Staffing policyB) Management training and developmentC) Performance appraisal D) Compensation policy
Factors which differentiate international from domestic HRM
More HR activitiesMore HR activities: taxation, culture : taxation, culture orientation, administrative servicesorientation, administrative services
The need for a broader perspectiveThe need for a broader perspective: cater to : cater to multiple needsmultiple needs
More involvement in employees’ personal livesMore involvement in employees’ personal lives: : adjustment, spouses, childrenadjustment, spouses, children
Changes in emphasis as the workforce mix of Changes in emphasis as the workforce mix of expatriates and locals variesexpatriates and locals varies: fairness: fairness
Risk exposureRisk exposure: expatriate failure, terrorism: expatriate failure, terrorism Broader external influencesBroader external influences: government : government
regulations, ways of conductregulations, ways of conduct
Different Types of Companies
International corporationDomestic firm that uses
its existing capabilities to move into overseas markets.
Multinational corporation (MNC)Firm with independent
business units operating in multiple countries./Firm that attempts to balance local responsiveness and global scale via a network of specialized operating units.
Global corporationFirm that has integrated
worldwide operations through a centralized home office.
Main Challenges in IHRM
Main challenges in IHRM
Issues of expatriation and repatriationDeployment – getting the right mix of skills in the
organization regardless of geographical locationKnowledge and innovation dissemination –
managing critical knowledge and speed of information flow
Talent identification and development – identify capable people who are able to function effectively
Workforce Diversity issues International ethicsLanguage (e.g. spoken, written, non-verbal)
Main challenges in IHRM(cond..)
Different labor lawsDifferent political climateDifferent stage(s) of technological
advancementDifferent values and attitudes e.g. time,
achievement, risk takingRoles of religion e.g. sacred objects, prayer,
taboos, holidays, etcEducational level attainedSocial organizations e.g. social institutions,
authority structures, interest groups, status systems
Types of international work Expatriation
An employee sent by his/her company in one country to work in a different country.
Global team projectBringing together employees from different locations
to complete a specific team project. Short-term assignments
Sending employees on assignments, such as a three-month assignment, to a foreign location.
Virtual assignment. Assignments requiring employees in different locations
to use information technology to communicate on job projects and tasks.
Source: Adapted from P.V. Morgan, ‘International human resource management: Fact or fiction?’, Personnel Administrator, 31(9), 1986, p.44.
Model of IHRM
Types of employees in an MNE
Parent-country nationals (PCNs) Employees who were born and live in a parent country.A parent (or home) country: the country in which
a company’s corporate headquarters is located.Host-country nationals (HCNs)
Employees born and raised in a host country.Host country: a country in which the MNE seeks
to locate or has already located a facility.Third-country nationals (TCNs)
Employees born in a country other than a parent or host country.
Global Staffing Issues Selecting candidates for overseas assignment
Assignment terms and documentation
Relocation processing and vendor management
Immigration processing
Cultural and language orientation and training
Compensation administration and payroll processing
Tax administration
Career planning and development
Handling of spouse and dependent matters
Staffing policy
Staffing policySelecting individuals with requisite skills to do a
particular jobTool for developing and promoting corporate
cultureView People as Resource
Types of Staffing PolicyEthnocentricPolycentricGeocentric
Firms pursue an ethnocentric staffing policy for three reasons:
i. First, the firm may believe there is a lack of qualified individuals in the host country to fill senior management positions.
ii. Second, the firm may see an ethnocentric staffing policy as the best way to maintain a unified corporate culture.
iii. Third, if the firm is trying to create value by transferring core competencies to a foreign operation.
Ethnocentric Approach
Parent-Country Nationals
Advantages• Organizational control and coordination is maintained and
facilitated.• Promising managers are given international experience.• PCNs may be the best people for the job because of special skills
and experience.• There is assurance that subsidiary will comply with company
objectives, policies, and so on.Disadvantages• The promotional opportunities of HCNs are limited.• Adaptation to host country may take a long time.• PCNs may impose an inappropriate HQ style.• Compensation for PCNs and HCNs may differ.
The host country nationals are recruited to manage subsidiaries in their own country, while parent country nationals occupy the key positions at corporate headquarters.
The policy is best suited to firms pursuing a multi-domestic strategy.
The Polycentric Approach
Host-Country Nationals
Advantages• Language and other barriers are eliminated• Hiring costs are reduced, and no work permit is required• Continuity of management improves, since HCNs stay longer in positions• Government policy may dictate hiring of HCNs• Morale among HCNs may improve as they see career potential
Disadvantages• Control and coordination of HQ may be impeded• HCNs have limited career opportunity outside the subsidiary• Hiring HCNs limits opportunities for PCNs to gain foreign experience• Hiring HCNs could encourage a federation of national rather than global units
A geocentric staffing policy is one in which the best people are sought for key jobs throughout the organization, regardless of nationality. It is well suited to firms pursuing either a global or transnational
strategy.
Geocentric Staffing
Third-Country Nationals
Advantages
• Salary and benefit requirements may be lower than for PCNs• TCNs may be better informed than PCNs about host-country
environment
Disadvantages• Transfer must consider possible national animosities (e.g.,
India and Pakistan)• The host government may resent hiring TCNs• TCNs may not want to return to their own countries after
assignment
Staffing Policies
• The Ethnocentric Approach –PCNs
• The Polycentric Approach- HCNs & PCNs
• The Geocentric Approach- PCNs,TCNs & HCNs
• The Regiocentric Approach-Limited PCNs, TCNs & HCNs
Technical Ability
SELECTION DECISIONINDIVIDUAL SITUATION
Cross-Cultural Suitability/ Personality
Language
FamilyRequirements
Country-CulturalRequirements
MN Exposure Requirements
Selection Criteria for International Assignments
Factors Important in International Assignee Success
I. Job Knowledgeand Motivation•Managerial & organizational ability•Imagination, creativity•Administrative skills•Alertness•Responsibility•Industriousness•Initiative and energy•High motivation•Frankness•Belief in mission and job•Perseverance
II. Relational Skills• Courtesy • Display of respect• Kindness• Empathy• Non-judgmentalness• Integrity• Confidence
Source: Adapted from Arthur Winfred Jr., and Winston Bennett Jr., “The International Assignee: The Relative Importance of Factors Perceived to Contribute to Success,” Personnel Psychology 18 (1995), pp. 106–107.
IV. Extracultural Openness
• Variety of outside interests
• Interest in foreign cultures
• Openness• Local language [s]
known• Outgoingness &
extroversion• Overseas experience
V. Family Situation
• Adaptability of spouseand family
• Spouse’s positive opinion
• Willingness of spouse to live abroad
• Stable marriage
III. Flexibility/Adaptability
• Resourcefulness
• Ability to deal with stress
• Flexibility
• Emotional stability
• Willingness to change
• Tolerance for ambiguity
• Adaptability
• Independence
• Dependability
• Political sensitivity
• Positive self-image
Factors Important in International Assignee Success
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
Culture shock Perpetual stress experienced by people who
settle overseas. Repatriation
Training MethodsReviewing 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.
Performance Appraisal of International ManagersWho Should Appraise Performance?
Home-country evaluationsHost-country evaluations
Adjusting Performance CriteriaAugmenting job dutiesIndividual learningOrganizational learning
Providing FeedbackDebriefing interview
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 country1. Calculate base pay2. Figure cost-of-living allowance (COLA)3. Add incentive premiums4. Add assistance programs
Expatriate Compensation Systems (cont’d)Host-Based Pay
Expatriate pay comparable to that earned by employees in a host country to which the expatriate is assigned.
LocalizationAdapting pay and other compensation
benefits to match that of a particular countryOther Issues
Adequacy of medical carePersonal securityEducation
