4. global hrm
Post on 11-Feb-2017
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International HumanResource Management
(Global HRM)
By, Priya Unadkat
Definition:
HRM as a process of procuring, developing, compensating and retaining people in organization operating beyond national boundaries at the global
level
17–2
Inter-country Differences Affecting HRM
Cultural Factors Economic Systems Labor cost Legal and Industrial Relations Factors
Cont’d
Cultural Factors U.S. Managers are more concerned with getting the jobs done. Chinese Managers are more concerned with maintaining a
harmonious environment. Hong Kong Managers fell between these extremes. Compared to U.S. employees, Mexican workers expect
managers to keep distance and be formal When the workload increases, Australian and Singaporean
firms add more staff while Korean and Japanese firms insist existing staff to work for longer hours.
Economic Systems Some countries in Euro zone put more restrictions on the
number on hours an employee can work. Portuguese workers average about 1980 hours of work
annually while German workers average 1648 hours. Labor cost
Higher labor cost in USA and UK than India Legal and Industrial Relations Factors
Germany, codetermination employees have legal right in policy making
India, state plays major role in IR.
Cont’d
Differences between Domestic HRM and IHRM
1. More HR activities2. The need for a broader perspective3. More involvement in employees’ personal lives4. Changes in emphasis as the workforce mix of expatriates
and locals varies5. Risk exposure6. Broader external influences
1. More HR Activities
Human Resource Planning Difficulty in implementing HR procedure in host countries. Difficulty in aligning strategic business planning to HRP and vice-versa. Providing developmental opportunities for international managers.
Employee Hiring Ability to mix with organisation’s culture. Ethnocentric, polycentric or geocentric approach to staffing. Selection of expatriates. Coping with expatriate failures. Managing repatriation process.
Training and Development Emphasis on cultural training Language training Training in manners and mannerisms.
Cont’d
Compensation Devising an appropriate strategy to compensate expatriates. Minimising discrepancies in pay between parent, host and third country
nationals. Issues relating to the re-entry of expatriates into the home country.
Performance Management Constraints while operating in host countries need to be considered. Physical distance, time difference and cost of reporting system add to the
complexity. Identification of raters to evaluate subsidiary performances.
Industrial Relations Who should handle industrial relations problem in a subsidiary? What should be the attitude of parent company towards unions in a
subsidiary? What should be union tactics in subsidiaries?
Tax equalization Relocation & orientation Administrative services Host government relation Language translation
2. The need for a broader perspective More than one national group of employees working.
Cont’d
3. More involvement in employees’ personal lives Schooling, housing Banking, investment Recreational program
4. Changes in emphasis as the workforce mix of expatriates and locals varies As operations matures Local staff availability Taxation, relocation, orientation
Staffing, training & development
Cont’d
5. Risk exposure Expatriate failure Under performance
Higher cost of failure – direct & indirect Terrorism
6. Broader external influences Type of government Developed / developing country
Cont’d
A Model of IHRM
International
No investment outside home country
Import-export Sells in more than one
country Standard product
Multinational
Investment in other countries
Manufacturing Operates in more than
one country Customized products
Basic Functions in International HRM
HRP
Recruitment and Selection
Training and Development
Performance Management
Remuneration
Repatriation
Employee RelationsO
RG
AN
ISAT
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AL
EFF
EC
TIV
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Basic Functions in International HRM
HRP
Recruitment and Selection
Training and Development
Performance Management
Remuneration
Repatriation
Employee RelationsO
RG
AN
ISAT
ION
AL
EFF
EC
TIV
EN
ES
S
International recruitment
Sources of Global Recruitment
Parent Country Nationals: Citizens of the country in which the multinational company
has its headquarters. Host Country Nationals:
Employees of the company’s subsidiary who are the citizens of the country where the subsidiary is located.
Third Country National: For eg: Mr. Akhil- an Indian citizen-is working for an
American subsidiary in France. Mr. Akhil for the American subsidiary in France is called third country national.
Approaches to StaffingApproaches for staffing:
EthnocentricPolycentricGeocentricRegiocentric
Ethnocentric PCNs Strategic decisions are made at headquarters; Limited subsidiary autonomy; Key positions in domestic and foreign operations
are held by headquarters’ personnel; PCNs manage subsidiaries.
Polycentric Each subsidiary is a distinct national entity with
some decision-making autonomy; HCNs manage subsidiaries who are seldom
promoted to HQ positions; PCNs are rarely transferred to subsidiary
positions. They are at key positions at headquarter.
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.
Regiocentric Reflects a regional strategy and structure; Regional autonomy in decision making; Staff move within the designated region,
rather than globally; Staff transfers to headquarter are rare.
The Expatriate Assignment Life Cycle
Determining the Need for Expatriate
The Selection Process
Crisis and failure
Crisis and Adjustment
Repatriation and
AdjustmentDeparture
Pre-assignment Training
Post-arrival Orientation and
Training
Reassignment Abroad
or
or
Why Expatriate Assignments Fail
Personality Personal intentions Family pressures Inability of the spouse to adjust Inability to cope with larger overseas responsibility. Lack of cultural skills
17–28
Cultural shock
Disruptions to establish routines of behaviour
Culture Shock Cycle
Factors in Expatriate Selection
Technical Ability
Cross-Cultural Suitability
Family Requirements
Country-Cultural
RequirementsLanguage MNC
Requirements
Selection Decision
Individual Situation
International Training
Components of Effective Training
Cultural awareness programs Preliminary visits
Language training Practical assistance Training for the training role TCN and HCN expatriate training
InternationalPerformance Management
Crucial post assignment issue Steps
Linkage to organizational strategy Setting individual goals Identifying variables Appraising performance Feedback on progress towards goal Opportunity for improvement Linking result with rewards
International compensation
The main approaches to calculating expatriate pay are:
Home-based pay /Balance sheet approach – The provision of remuneration (pay, benefits and allowances) to expatriates that is the same as in their home country.
Host-based pay/Going rate approach – Paying the market rate for the job in the host country. Additional allowances may be paid.
Selected country based – Salary structure in a selected country
Hybrid
Incentives
Foreign service premiums Financial payments over and above regular base pay, and
typically range between 10% and 30% of base pay. Hardship allowances
Payments to compensate expatriates for exceptionally hard living and working conditions at certain foreign locations.
Mobility premiums Lump-sum payments to reward employees for moving
from one assignment to another.
17–38
Cost-of-living allowances (COLAs) Relocation allowance Housing/utilities Benefits
Car, Education to children, Home leave, Recuperation leave
Taxation:
Most time consuming issue Tax equalization
Tax equalization is a process that ensures that the tax costs incurred by an assignee on an international assignment approximates what the tax costs would have been had he remained at home.
Tax protection Tax protection is a process that reimburses an assignee
the excess taxes he incurs while on an international assignment.
Useful facts….. Individualistic cultures like the U.S. and the UK are OK with
bonuses/commissions based on individual performance. Collective cultures like Japan would prefer to have group bonuses/commissions.
Some countries have a different definition of “family”. In India family includes parents not just children. This makes a difference in insurance coverage.
Rating employees on performance is difficult in the Middle East and Asia (i.e. Korea) because of face-saving. It is difficult for managers to talk to employees about poor performance as this causes the employee to “lose face”.
Cont…
China has a very aggressive sales compensation environment, India shows more interest in base salary and the CTC (cost-to-company) package than variable compensation.
Japanese organization follow Nenko system for promotion.
U.S. workers want two weeks vacation, not because of culture, but because that is the norm in the U.S. In Germany, it is likely to be one month of vacation.
In Japan or Korea large changes in bonuses and allowances are preferred over large changes in base pay because social security and national health insurance rates paid by employers are based on basic pay, not bonuses or allowances.
Union influences play an important role in determining wage policies in Australia. In Hong Kong, by contrast, labour unions are extremely weak.
Cont…
Repatriation :
Needs careful handing May result in re-entry shock or reverse culture shock Future expatriates may depend on repatriation
programs Benefits:
MNCS like Cisco, Ford, are hiring foreign return Indian executives
Global culture Global social network Co-ordination and control Exposure and expertise
The Repatriation Process
Preparation
PhysicalRelocation
Transition
Re-adjustment
RepatriationProcess
• Future• New positions• Checklist of items• Good bye to friends• Travelling• Relocation assistnce
• Housing and schooling
• Driving license• Bank accounts
• Coping with reverse culture shock
• Career demand
Preparation
PhysicalRelocation
Transition
Re-adjustment
RepatriationProcess
Preparation
PhysicalRelocation
Transition
Re-adjustment
RepatriationProcess
Preparation
PhysicalRelocation
Transition
Re-adjustment
RepatriationProcess
Preparation
PhysicalRelocation
Transition
Re-adjustment
RepatriationProcess
Thank You
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