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Horizons and team Horizons and team buildingbuilding

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Life within horizonsLife within horizons

Our genes, parental and educational Our genes, parental and educational training, societal rules shape our training, societal rules shape our horizonshorizons

We can broaden them by living in We can broaden them by living in other countries, learning foreign other countries, learning foreign languages and reading books about languages and reading books about other cultures, cultivating empathy, other cultures, cultivating empathy, standing in the shoes of othersstanding in the shoes of others

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Language gapLanguage gap

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Managing the horizons – team Managing the horizons – team buildingbuilding

The challenge of managing across cultures The challenge of managing across cultures boils down to boils down to philosophies and systemsphilosophies and systems used to manage peopleused to manage people

The way a company organizes its The way a company organizes its international operations influences the international operations influences the type of managerial and human resources type of managerial and human resources issues it facesissues it faces

Team building involves Team building involves recruitment, recruitment, selection, development and selection, development and compensationcompensation of employees working in of employees working in an international settingan international setting

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Issues for international Issues for international managementmanagement

It is not enough: It is not enough: To put a “global patina” on a manager To put a “global patina” on a manager

who spent 20 years in a single countrywho spent 20 years in a single country To create a global business team where To create a global business team where

members come as representatives of members come as representatives of their particular geographytheir particular geography

to develop cultural ‘chameleons’ who to develop cultural ‘chameleons’ who adapt easily to national conditionsadapt easily to national conditions

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The goal must be to: The goal must be to:

Create managers with the Create managers with the capacity to transcend culturecapacity to transcend culture

Find the universals and build Find the universals and build multi-billion dollar business around multi-billion dollar business around themthem

Access and integrate a set of Access and integrate a set of differentiated national skill setsdifferentiated national skill sets

Carry the least national baggage!Carry the least national baggage!

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Types of international organizationsTypes of international organizations International corporationInternational corporation – domestic – domestic

firm that uses its existing capabilities to firm that uses its existing capabilities to move into overseas markets (Honda, move into overseas markets (Honda, Procter&Gamble)Procter&Gamble)

Multinational corporationsMultinational corporations – firm with – firm with independent business units operating in independent business units operating in multiple countries (Shell, Phillips, ITT)multiple countries (Shell, Phillips, ITT)

Global corporationGlobal corporation – firm that has – firm that has integrated worldwide operations through a integrated worldwide operations through a centralized home office (Panasonic, Nokia)centralized home office (Panasonic, Nokia)

Transnational corporationTransnational corporation – firm that – firm that attempts to balance local responsiveness attempts to balance local responsiveness and global scale via a network of and global scale via a network of specialized operating units (Ford, British specialized operating units (Ford, British Petroleum)Petroleum)

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Advantages of TNCsAdvantages of TNCs

Production and distribution extend Production and distribution extend beyond national boundaries, making it beyond national boundaries, making it easier to transfer technologyeasier to transfer technology

They have direct investments in many They have direct investments in many countries, affecting the balance of countries, affecting the balance of paymentspayments

They have a political impact that leads to They have a political impact that leads to cooperation among countries and to the cooperation among countries and to the breaking down of barriers of nationalismbreaking down of barriers of nationalism

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Cultural environment effectCultural environment effect

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IHRMIHRM Different cultural environments Different cultural environments

require different approaches to require different approaches to human resource management human resource management (HRM)(HRM)

Strategies, structures and Strategies, structures and management styles that are management styles that are appropriate in one cultural setting appropriate in one cultural setting may lead to failure in anothermay lead to failure in another

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HR issues of EU: staffingHR issues of EU: staffing The right to move freely throughout The right to move freely throughout

Europe opens labor marketsEurope opens labor markets Unemployment rates vary dramatically Unemployment rates vary dramatically

across countries (Spain – 25%; Norway across countries (Spain – 25%; Norway and Switzerland – 10%) due to political and Switzerland – 10%) due to political systems, sociocultural differences and systems, sociocultural differences and worker trainingworker training

Under a unified Europe, every worker has Under a unified Europe, every worker has guaranteed access to vocational trainingguaranteed access to vocational training

Need for Need for Euro executives Euro executives – who speak – who speak many languages, are mobile and many languages, are mobile and multiculturally competentmulticulturally competent

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HR issues of EU: HR issues of EU: productivity and motivationproductivity and motivation

Europeans work fewer hours, take longer Europeans work fewer hours, take longer vacations, enjoy far more social vacations, enjoy far more social entitlements than employees in the US and entitlements than employees in the US and AsiaAsia

Wages differ substantially across EuropeWages differ substantially across Europe Need to bring compensation levels more in Need to bring compensation levels more in

line with productivityline with productivity Equal pay for work of equal valueEqual pay for work of equal value Equal rights to social security (occupational Equal rights to social security (occupational

safety and health) benefits safety and health) benefits www.europa.eu.intwww.europa.eu.int

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International HRM vs domestic International HRM vs domestic HRMHRM

IHRM places greater emphasis on IHRM places greater emphasis on relocation, orientation and translationrelocation, orientation and translation services to help employees services to help employees adaptadapt to a to a new environmentnew environment

Assistance with tax matters, banking, Assistance with tax matters, banking, investment management, home rental, investment management, home rental, coordination of home visitscoordination of home visits

HR dpt must be particularly responsive to HR dpt must be particularly responsive to the local standards of cultural, political the local standards of cultural, political and legal environmentsand legal environments

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International staffingInternational staffing Expatriates (home-country nationals), Expatriates (home-country nationals),

host-country nationals, third-country host-country nationals, third-country nationals-comparison of advantagesnationals-comparison of advantages

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Why host country nationals?Why host country nationals?

Hiring local citizens is less costly because Hiring local citizens is less costly because the company doesn’t have to worry about the company doesn’t have to worry about the costs of home leaves, transportation, the costs of home leaves, transportation, and special schooling allowancesand special schooling allowances

Since local governments usually want Since local governments usually want good jobs for their citizens, foreign good jobs for their citizens, foreign employers may be required to hire thememployers may be required to hire them

Using local talent avoids the problem of Using local talent avoids the problem of employees having to adjust to the cultureemployees having to adjust to the culture

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RecruitmentRecruitment Different governmental regulations Different governmental regulations

regarding recruiting foreign labor, regarding recruiting foreign labor, physically disabled, war veterans or physically disabled, war veterans or displaced persons (work permit or displaced persons (work permit or visa restrictions) - use of search firmsvisa restrictions) - use of search firms

Recruitment of guest workers involve Recruitment of guest workers involve lower direct labor costs but higher lower direct labor costs but higher indirect costs (language training, indirect costs (language training, health services, transportation, etc)health services, transportation, etc)

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Cultural models of recruitmentCultural models of recruitment

Anglo-Dutch model – Anglo-Dutch model – managed potentialmanaged potential::

Monitoring of high potentialsMonitoring of high potentials Decentralized recruitment for Decentralized recruitment for

technical and functional jobstechnical and functional jobs No corporate monitoringNo corporate monitoring Little elite recruitmentLittle elite recruitment

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Cultural models of recruitment(2)Cultural models of recruitment(2)

German model – functional German model – functional ladders and apprenticeshipladders and apprenticeship

- functional careers, relationships - functional careers, relationships and communicationand communication

-annual recruitment from -annual recruitment from universities and technical sectoruniversities and technical sector

-2-year’s apprentice trials+job -2-year’s apprentice trials+job rotation+intensive trainingrotation+intensive training

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Cultural models of recruitment(3)Cultural models of recruitment(3) Japanese model: time-scheduled Japanese model: time-scheduled

tournament and managed elitestournament and managed elites -unequal job opportunities: good jobs -unequal job opportunities: good jobs

to the bestto the best -4-5 years in a job-4-5 years in a job -7-8 years up-or-out-7-8 years up-or-out -job rotation, intensive training, -job rotation, intensive training,

mentoringmentoring -regular performance monitoring-regular performance monitoring

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Cultural models of recruitment(4)Cultural models of recruitment(4) Latin model: political Latin model: political

tournament, elite entry, no trialstournament, elite entry, no trials --high filtershigh filters -competition and collaboration with -competition and collaboration with

peerspeers -If stuck, move out-If stuck, move out -Elite pool recruitment: grandes ecoles, -Elite pool recruitment: grandes ecoles,

MBAs, Scientific PhD’sMBAs, Scientific PhD’s -multifunctionality-multifunctionality

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Selection processSelection process Various criteria: merit, family ties, social Various criteria: merit, family ties, social

status, language and common originstatus, language and common origin Different employment factors depend on the Different employment factors depend on the

extent of contact with the local culture and extent of contact with the local culture and difference (political, legal, socioeconomic and difference (political, legal, socioeconomic and cultural) between foreign and home cultural) between foreign and home environmentenvironment

Wherever possible, preference should be Wherever possible, preference should be given to host country nationals possessing given to host country nationals possessing necessary managerial abilities and technical necessary managerial abilities and technical skillsskills

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Selecting expatriatesSelecting expatriates

Typically, selection decisions are driven by Typically, selection decisions are driven by an overriding concern with an overriding concern with technical technical competence, professional and international competence, professional and international experience, as well as interpersonal skillsexperience, as well as interpersonal skills

Satisfactory adjustment depends on Satisfactory adjustment depends on flexibility, emotional maturity and stability, flexibility, emotional maturity and stability, empathy for the culture, language and empathy for the culture, language and communication skills, resourcefulness and communication skills, resourcefulness and initiative, and diplomatic skills.initiative, and diplomatic skills.

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Staffing transnational teamsStaffing transnational teams Transnational teams –members of multiple Transnational teams –members of multiple

nationalities working on projects that span nationalities working on projects that span multiple countriesmultiple countries

Especially useful for performing tasks that Especially useful for performing tasks that the firm as a whole is not yet structured to the firm as a whole is not yet structured to accomplish : e.g. to transfer technology to accomplish : e.g. to transfer technology to another region, to communicate between another region, to communicate between headquarters and subsidiaries, to headquarters and subsidiaries, to customize a strategy for different localitiescustomize a strategy for different localities

Selection methods: interviews (the Selection methods: interviews (the candidate and the spouse), assessment candidate and the spouse), assessment centers and testscenters and tests

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Training and developmentTraining and development

Skills of the global managerSkills of the global manager (Levi (Levi Strauss):Strauss):

- ability to seize strategic opportunities- ability to seize strategic opportunities- ability to manage highly decentralized ability to manage highly decentralized

organizationsorganizations- awareness of global issuesawareness of global issues- sensitivity to issues of diversitysensitivity to issues of diversity- competence in interpersonal relationscompetence in interpersonal relations- skill in building community skill in building community

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Content of trainingContent of training Language training(500 hours, 3 Language training(500 hours, 3

months)months) Cultural trainingCultural training Assessing and tracking career Assessing and tracking career

developmentdevelopment Managing personal and family lifeManaging personal and family life ““good education” is different in different good education” is different in different

cultures (French hautes ecoles, German cultures (French hautes ecoles, German Volkswirtschaftshochschule,etc)Volkswirtschaftshochschule,etc)

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Verbal and non-verbal trainingVerbal and non-verbal training In UK to ‘table” a subject means to put it on the table In UK to ‘table” a subject means to put it on the table

for present discussion. In US – to postpone discussion for present discussion. In US – to postpone discussion indefinitelyindefinitely

Getting straight to the point or avoiding such Getting straight to the point or avoiding such directnessdirectness

In Japan - 16 ways to avoid saying “no”In Japan - 16 ways to avoid saying “no” When something is “inconvenient” in China, it is When something is “inconvenient” in China, it is

most likely impossiblemost likely impossible Expressions of anger in some cultures are either Expressions of anger in some cultures are either

unacceptable or tabooedunacceptable or tabooed Treat silence as “communication space”Treat silence as “communication space” Avoid excessive gesturingAvoid excessive gesturing

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Cultural trainingCultural training C-c differences are most elusive aspects of C-c differences are most elusive aspects of

international businessinternational business To prepare for an international assignment, one should To prepare for an international assignment, one should

become acquainted with the following aspects of the become acquainted with the following aspects of the host country:host country:

- social and business etiquette- social and business etiquette - history, geography and folklore- history, geography and folklore - cultural values and priorities (sources of pride and - cultural values and priorities (sources of pride and

achievement) religion and political structureachievement) religion and political structure- practical matters (currency, transport, business hours, practical matters (currency, transport, business hours,

time zones)time zones)- the languagethe language

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Training methodsTraining methods Books, lectures and videotapes about the Books, lectures and videotapes about the

culture, geography, social and political history, culture, geography, social and political history, climate, food and so onclimate, food and so on

Sensitivity training at the affective level – a Sensitivity training at the affective level – a powerful technique in the reduction of ethnic powerful technique in the reduction of ethnic prejudicesprejudices

Field experiences ( in a nearby “microculture”)Field experiences ( in a nearby “microculture”) Temporary assignments to encourage shared Temporary assignments to encourage shared

learninglearning Apprenticeship training ( 3-way contract Apprenticeship training ( 3-way contract

between an apprentice, parents, and the between an apprentice, parents, and the organization)organization)

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Teambuilding exercisesTeambuilding exercises Case studiesCase studies Going camping togetherGoing camping together Climbing mountains, rafting down rivers, Climbing mountains, rafting down rivers,

crossing desertscrossing deserts Leaders emerge, different people take Leaders emerge, different people take

charge of provisioning, planning, direction charge of provisioning, planning, direction taking, financing, logistics, problem-solvingtaking, financing, logistics, problem-solving

Observation of foreign partners behavior Observation of foreign partners behavior and perception of reasoning behind themand perception of reasoning behind them

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Assessing and tracking career Assessing and tracking career developmentdevelopment

To maximize the career benefits of To maximize the career benefits of a foreign assignment 2 key a foreign assignment 2 key questions should be asked:questions should be asked:

- Does the company management Does the company management view international business as a view international business as a critical part of its operation?critical part of its operation?

- Within the top management, how Within the top management, how many executives have foreign-many executives have foreign-service in their background?service in their background?

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How to deal with repatriation? How to deal with repatriation?

Programs to help employees make the Programs to help employees make the transition back home smoother transition back home smoother

In fact, repatriates lose their positions, In fact, repatriates lose their positions, feeling their firms disregard their feeling their firms disregard their difficulties in readjusting to home life, difficulties in readjusting to home life, companies do not fully utilize their companies do not fully utilize their knowledge, understanding and newly knowledge, understanding and newly acquired skillsacquired skills

In US, 46% of repatriates have reduced In US, 46% of repatriates have reduced autonomy and authorityautonomy and authority

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Managing personal and family lifeManaging personal and family life

Cultural shock and family stressCultural shock and family stress Mundane matters: phone connection Mundane matters: phone connection

or Internet, inability to read street or Internet, inability to read street signs, transportation routine, invisible signs, transportation routine, invisible and unspoken code of behaviour, and unspoken code of behaviour, everyday etiquette, gift-giving, meal everyday etiquette, gift-giving, meal taking, customs, traditions and ritualstaking, customs, traditions and rituals

Remedy: knowledge, empathy and Remedy: knowledge, empathy and tolerancetolerance

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Compensation – one of the most Compensation – one of the most complex areas of international complex areas of international

HRMHRM Different countries- different norms Different countries- different norms

for employees compensation and use for employees compensation and use of incentives and rewards: prestige, of incentives and rewards: prestige, independence, money or respect, independence, money or respect, family, job security, social acceptance family, job security, social acceptance and powerand power

General guiding philosophy should General guiding philosophy should be: “think globally and act locally”be: “think globally and act locally”

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Individualism and compensation Individualism and compensation strategies (high)strategies (high)

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Individualism and compensation Individualism and compensation strategies (low)strategies (low)

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Overall approachOverall approach

Compensation systems should support the Compensation systems should support the overall strategy of the organization but be overall strategy of the organization but be customized for local conditions.customized for local conditions.

For expatriates compensation plans must For expatriates compensation plans must provide an incentive to leave the home provide an incentive to leave the home country; enable maintenance of an equivalent country; enable maintenance of an equivalent standard of living; facilitate repatriation; standard of living; facilitate repatriation; provide for education of children; and make it provide for education of children; and make it possible to maintain relationships with family, possible to maintain relationships with family, friends, and business associatesfriends, and business associates

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Questions Questions

What are the major issues in What are the major issues in international HRM?international HRM?

If you were starting now to plan a If you were starting now to plan a career in international HRM what career in international HRM what steps would you take to prepare steps would you take to prepare yourself?yourself?

If the cost of living is lower in a If the cost of living is lower in a foreign country than in the home foreign country than in the home country, should expatriates be paid country, should expatriates be paid less than they would be at home?less than they would be at home?