International and Comparative Human

Resource Management

Creating an International Workforce: IHRM orientation and staffing strategy

Alhajie Saidy Khan LAIBS

Lecture outline

The context for international HR resourcing

Internationalisation strategy/stage and international

staffing strategy

International orientation and staffing

International assignment success factors

Selection criteria for international assignment

Expatriate selection and strategy

Conditions for using expatriates for international

assignments

Expatriate failure and its consequences

Context for international staffing

Globally integrated and co-ordinated systems and need local

sensitivity and responsiveness.

Global approach to talent source and thus, diverse workforce.

Blurring of traditional lines HR functions and need for resourcing

specialists to also focus on range of related (not necessarily

traditional) HR functions

Increase Merger and acquisition requires staffing in a changing

environment as well as harmonisation of HR practices.

Global networks of integrated systems – greater opportunities for

learning from diverse practices, but also fast and continuously

Rapidly changing and volatile business situations and global

markets and thus speed to recruit, deploy, develop and shed people

CIPD, 2013

Internationalisation strategy and IHRM orientation

Early stages of internationalisation = ethnocentric orientation

Multi-local strategies = ethno, poly and regiocentric orientation

Regional strategies = regiocentric with element of geocentric IHRM orientation

International strategy = ethno and plycentric orientation

Global strategy = geocentric orientation

Edwards and Rees, 2006/11; Harzing and Pinnington, 2011; Perlmutter,

Ethnocentric staffing orientation

Key management positions filled by parent-country

nationals

Advantages:

Overcomes lack of qualified managers in host nation

Unified and coordinated policy that help maintain head

quarter control over subsidiaries

Could help transfer core competencies from and to HQ

Disadvantages:

Could produces resentment in host country

Can lead to cultural myopia

Polycentric staffing orientation

Host-country nationals manage subsidiaries and PCNs hold key headquarter positions

Best suited to multi-domestic businesses

Advantages:

Could help alleviates cultural myopia.

Relatively inexpensive approach to international staffing

Helpful for transfer core competencies

Disadvantages:

Limits opportunity for experience of host-country nationals outside their own country.

Can create gap between home-and host-country operations

Limit HQ ability to coordinate and control subsidiaries

Regiocentric staffing orientation

Nationals of regions manage subsidiaries within their respective regions

Parent company nationals hold key HQ positions

Advantages Allows for greater regional interaction and sharing of across regional

experiences

Shows greater sensitivity to local conditions and demands

Relatively lower wage bills

Eases transition to a global, geocentric orientation

Disadvantages Could potentially inhibit ability to see the necessity for global HRM orientation

Potential to improve regional career opportunities at the expense of wider international career opportunities

Animosities between neighbouring countries could hinder success and undermine wider strategic vision

Geocentric staffing orientation

Seek best people, regardless of nationality

Advantages:

Enables the firm to make best use of all its human resources

Equips executives to work in different international context

Helps build strong unifying and informal management network

Disadvantages:

National immigration policies may limit implementation

Expensive to implement due to training and relocation costs

Compensation structure can be problematic

Conditions for successful Geocentric staffing

Availability of highly competent or potentially

competent employees

Some international experience within top

management

Competent or potentially competent cadre of

managers willing and ready for international

deployment

Willingness to learn and an openness to new

and different experiences and ideas

Key international assignment success factors

Professional/technical competence

Relational ability

Motivation

Family situation

Language skills

Acceptance of assignment

Torrington et al, 2007

Criteria for selection for international assignment

Specific organisation

requirements (technical)

Cross-national and cross-regional requirements

Host country requirements Norms and traditions

Language

Knowledge of institutions

and legal system etc.

Family requirement Selection decision

Mendenhall and Oddou, 1985; See Sparrow, 2007

Corporate and technical criteria

Easily evaluated technical and managerial competencies of assignee are most important

Organisational situational factors including:

Requirements to send expatriates to carryout assignments in certain regions than otherwise

Involvement of partners as in joint ventures and cross-border alliances

Using specific skills and function and training as selection criteria

Cross-national criteria

Individual traits and characteristics that impact success

or failure of international assignment (e.g. cultural

empathy, adaptability, language ability etc.).

Ability to implement technical and managerial tasks and

be reasonably comfortable in a foreign environment

These criteria are, however, sometimes very difficult to

determine and measure

Host country requirements

Copping with alternative social norms and forms of organisation

Ability to manage “hardship postings” (remote locations, high security risks, poor standard of living conditions)

Capacity to work and live under what might be perceived as repressive political and social contexts

Legal requirements (e.g. need and difficulty of acquiring work permit)

Language and other social criteria

Core situational factor: knowledge and ability to directly

communicate in the language of the host is critical for both

assignee and spouse/family

Family: could make potential international assignee refuse

international assignment

Gender: despite steady increase in dual expatriate careers

couples, some country may be less suitable for female

international assignees

Mendenhall, M. and Oddou’s four dimensional criteria

Self-Orientation Possessing high self-esteem and self-confidence

Others-Orientation Ability to develop relationships with host-country nationals

Willingness to communicate

Perceptual Ability The ability to understand why people of other countries behave the

way they do

Being non-judgmental and flexible in management style

Cultural Toughness Ability to adjust to the ways of country of assignment

Source: Academy of Management Review, Vol. 10:1 (pp. 39-47)

See also, Reich and Harzing (2011) in Harzing and Pinnington (eds.); Tahvanainen and Suutari (2005) in Scullion and Linehan (eds.)

Changing context and changing nature of international staffing

From expatriate management to, e.g.:

International commuters & assignees on short term or medium term

business trips

Contract expatriates

Employees used on long-term business trips

Cadres of global managers

International transferees (from one subsidiary to another)

‘self-initiated movers’ (SIMS) - live and work away from their home

country

Virtual international employees active in cross-border project teams

Domestically based employees dealing with international suppliers and/or

clients

Overseas workers attracted to a domestic labour market.

(CIPD)

Expatriate management remain Core aspect of international staffing function

According to CIPD, various types of international

employees indicate that the claim changing business

context and requirements have reduced the reliance on

“longer term expatriation in more mature markets and

grown in developing ones and, in the global

community”.

Nevertheless, expatriates management remains a major

aspect of work of HR practitioners responsible for

international assignments

Definitions

Expatriate: citizens of one country working in another

“Inpatriates”: expatriates who are citizens of a foreign country working in the home country of their multinational employer

Conditions for using expatriates

When there is desire for international expansion, but lack

of prior international experience

Need or desire to transfer of firm-specific knowledge

An ethnocentric orientation underpinned by strong single-

status Corporate outlook and strategy

Having new subsidiaries that require guidance

Significant differences between parent country and host

country ‘culture’ and institutional frameworks

When host country regulations cast doubts on fulfilment of

contracts

Why MNCs use expatriates

Management development - acquiring international

management skills and competencies

Coordination and control of/over diverse and

dispersed operations and activities

Effective communication of local needs and strategic

information to and from headquarters

Expatriate failure

Expatriate failure refers to the premature return

of an expatriate manager before the completion

of his or her international assignment due to

the person’s failure to attain the expected

performance levels and due to the persons

continuing inability to adjust to the new work

and cultural environment in the host country

The Cost of Expatriate Failure

Expatriate failure has two cost components:

Direct Costs: Can be easily measured in monetary terms (e.g.:

air fare, relocation expenses, salary and training). Varies

according to position, country of assignment, exchange rates

and nature of replacement

Indirect Costs: Cannot be measured easily in monetary terms,

but may be significantly higher than the direct costs. Examples

include: loss of reputation and market share, morale and

productivity in the local work force, complications with the

host government, lost of credibility and career advancement