1–1

MGT-351MGT-351

Human Resource ManagementHuman Resource Management

Chapter-17Chapter-17

Managing Global HRManaging Global HR

17–2

HR and the Internationalization of BusinessHR and the Internationalization of Business

• The Global ChallengesThe Global Challenges

Coordinating market, product, and production plans Coordinating market, product, and production plans on a worldwide basis.on a worldwide basis.

Creating organization structures capable of Creating organization structures capable of balancing centralized home-office control with balancing centralized home-office control with adequate local autonomy.adequate local autonomy.

Extending HR policies and systems to service Extending HR policies and systems to service staffing needs abroad.staffing needs abroad.

17–3

Challenges of International HRMChallenges of International HRM

• DeploymentDeployment Easily getting the right skills to where they are Easily getting the right skills to where they are

needed, regardless of geographic location.needed, regardless of geographic location.

• Knowledge and Innovation DisseminationKnowledge and Innovation Dissemination Spreading state-of-the-art knowledge and practices Spreading state-of-the-art knowledge and practices

throughout the organization regardless of their origin.throughout the organization regardless of their origin.

• Identifying and Developing Talent on a Global Identifying and Developing Talent on a Global Basis Basis Identifying those who can function effectively in a Identifying those who can function effectively in a

global organization and developing their abilities.global organization and developing their abilities.

17–4

Intercountry Differences Affecting HRMIntercountry Differences Affecting HRM

International Human Resource

Management

CulturalFactors

Legal and Industrial Relations Factors

EconomicSystems

17–5

How to Implement a Global HR SystemHow to Implement a Global HR System

• Best practices for making a global HR system Best practices for making a global HR system more acceptable to local managers:more acceptable to local managers:

1.1. Remembering that global systems are more Remembering that global systems are more accepted in truly global organizations.accepted in truly global organizations.

2.2. Investigating pressures to differentiate and Investigating pressures to differentiate and determine their legitimacy.determine their legitimacy.

3.3. Working within the context of a strong corporate Working within the context of a strong corporate culture is best.culture is best.

17–6

A Global HR System (cont’d)A Global HR System (cont’d)

• Best practices for developing a more effective Best practices for developing a more effective global HR system:global HR system: Form global HR networks that make local HR Form global HR networks that make local HR

managers a part of global teams.managers a part of global teams.

Remember that it’s more important to standardize Remember that it’s more important to standardize ends and competencies than specific methods.ends and competencies than specific methods.

• Best practices for implementing the global HR Best practices for implementing the global HR system:system: Remember, “You can’t communicate enough.”Remember, “You can’t communicate enough.”

Dedicate adequate resources for the global HR Dedicate adequate resources for the global HR effort.effort.

17–7

Staffing the Global OrganizationStaffing the Global Organization

• International staffing: Home or local?International staffing: Home or local? Expatriates (expats)Expatriates (expats) Home-country nationalsHome-country nationals Third-country nationalsThird-country nationals

• OffshoringOffshoring Having local employees abroad do jobs that the Having local employees abroad do jobs that the

firm’s domestic employees previously did in-housefirm’s domestic employees previously did in-house

• Offshoring IssuesOffshoring Issues Effective local supervisory/management structureEffective local supervisory/management structure Screening and required training for localsScreening and required training for locals Local compensation policies and working conditionsLocal compensation policies and working conditions

17–8

Staffing the Global Organization (cont’d)Staffing the Global Organization (cont’d)

Ethnocentric

Polycentric

Geocentric

International Staffing Policy

Top Management Values

17–9

Staffing the Global Organization (cont’d)Staffing the Global Organization (cont’d)

Inability of Spouse to Adjust

Inability to Cope with Overseas

Responsibilities

Lack of Cultural Skills

Why Expatriate Assignments Fail

Personality

Personal Intentions

Family Pressures

17–10

Staffing the Global Organization (cont’d)Staffing the Global Organization (cont’d)

Realistic Previews

Careful Screening

Cultural and Language Training

Improved Benefits Packages

Improved OrientationHelping Expatriate

Assignments Succeed

17–11

Selecting Expatriate ManagersSelecting Expatriate Managers

• Adaptability ScreeningAdaptability Screening Assessing the assignee’s (and spouse’s) probable Assessing the assignee’s (and spouse’s) probable

success in handling the foreign transfer.success in handling the foreign transfer. Overseas Assignment InventoryOverseas Assignment Inventory

A test that identifies the characteristics and attitudes A test that identifies the characteristics and attitudes international assignment candidates should have.international assignment candidates should have.

• Realistic Previews Realistic Previews The problems to expect in the new job, as well as the The problems to expect in the new job, as well as the

cultural benefits, problems, and idiosyncrasies of the cultural benefits, problems, and idiosyncrasies of the country.country.

17–12

Orienting and Training Employees on Orienting and Training Employees on International AssignmentInternational Assignment

• There is little or no systematic selection and There is little or no systematic selection and training for assignments overseas.training for assignments overseas.

• Training is needed on:Training is needed on: The impact of cultural differences on business The impact of cultural differences on business

outcomes.outcomes.

How attitudes (both negative and positive) are How attitudes (both negative and positive) are formed and how they influence behavior.formed and how they influence behavior.

Factual knowledge about the target country.Factual knowledge about the target country.

Language and adjustment and adaptation skills.Language and adjustment and adaptation skills.

17–13

Trends in Expatriate TrainingTrends in Expatriate Training

• Rotating assignments that permit overseas managers to Rotating assignments that permit overseas managers to grow professionally.grow professionally.

• Management development centers around the world Management development centers around the world where executives hone their skills.where executives hone their skills.

• Classroom programs provide overseas executives with Classroom programs provide overseas executives with educational opportunities similar to stateside programs.educational opportunities similar to stateside programs.

• Continuing, in-country cross-cultural training.Continuing, in-country cross-cultural training.

• Use of returning managers as resources to cultivate the Use of returning managers as resources to cultivate the “global mind-sets” of their home-office staff.“global mind-sets” of their home-office staff.

• Use of software and the Internet for cross-cultural Use of software and the Internet for cross-cultural training.training.

17–14

Compensating ExpatriatesCompensating Expatriates

• The “Balance Sheet Approach”The “Balance Sheet Approach”

Home-country groups of expenses—income taxes, Home-country groups of expenses—income taxes, housing, goods and services, and discretionary housing, goods and services, and discretionary expenses—are the focus of attention.expenses—are the focus of attention.

The employer estimates what each of these four The employer estimates what each of these four expenses is in the expatriate’s home country, and expenses is in the expatriate’s home country, and what each will be in the host country.what each will be in the host country.

The employer then pays any differences such as The employer then pays any differences such as additional income taxes or housing expenses.additional income taxes or housing expenses.

17–15

TABLE 17–2 The Balance Sheet Approach (Assumes Base Salary of $80,000)

Annual Expense Chicago, U.S. Brussels, Belgium(U.S.$ Equivalent) Allowance

Housing & utilities $35,000 $67,600 $32,600

Goods & services 6,000 9,500 3,500

Taxes 22,400 56,000 33,600

Discretionary income 10,000 10,000 0

Total $73,400 $143,100 $69,700

Source: Joseph Martocchio, Strategic Compensation: A Human Resource Management Approach, 2nd edition (Upper Saddle River, NJ: Prentice Hall, 2001), Table 12-15, p. 294.

17–16

Incentives for International AssignmentsIncentives for International Assignments

• Foreign Service PremiumsForeign Service Premiums Financial payments over and above regular base Financial payments over and above regular base

pay, and typically range between 10% and 30% of pay, and typically range between 10% and 30% of base pay.base pay.

• Hardship AllowancesHardship Allowances Payments to compensate expatriates for Payments to compensate expatriates for

exceptionally hard living and working conditions at exceptionally hard living and working conditions at certain foreign locations.certain foreign locations.

• Mobility PremiumsMobility Premiums Lump-sum payments to reward employees for Lump-sum payments to reward employees for

moving from one assignment to another.moving from one assignment to another.

17–17

Appraising Expatriate ManagersAppraising Expatriate Managers

• ChallengesChallenges Determining who should appraise the manager.Determining who should appraise the manager.

Deciding on which factors to base the appraisal.Deciding on which factors to base the appraisal.

• Improving the Expatriate Appraisal ProcessImproving the Expatriate Appraisal Process Stipulate the assignment’s difficulty level, and adapt Stipulate the assignment’s difficulty level, and adapt

the performance criteria to the situation.the performance criteria to the situation.

Weigh evaluation more toward the on-site manager’s Weigh evaluation more toward the on-site manager’s appraisal than toward the home-site manager’s.appraisal than toward the home-site manager’s.

If the home-office manager does the actual written If the home-office manager does the actual written appraisal, use a former expatriate from the same appraisal, use a former expatriate from the same overseas location for advice.overseas location for advice.

17–18

Repatriation: Problems and SolutionsRepatriation: Problems and Solutions

• ProblemProblem Making sure that the expatriate and his or her family Making sure that the expatriate and his or her family

don’t feel that the company has left them adrift.don’t feel that the company has left them adrift.

• SolutionsSolutions Match the expat and his or her family with a Match the expat and his or her family with a

psychologist trained in repatriation issues.psychologist trained in repatriation issues. Make sure that the employee always feels “in the Make sure that the employee always feels “in the

loop” with what’s happening back at the home office.loop” with what’s happening back at the home office. Provide formal repatriation services when the expat Provide formal repatriation services when the expat

returns home.returns home.