mana3320-spring 2010 prewitt. international corporation ◦ domestic firm that uses its existing...

MANA3320-Spring 2010Prewitt

International corporation◦ Domestic firm that uses

its existing capabilities to move into overseas markets.

Multinational corporation (MNC)◦ Firm with independent

business units operating in multiple countries.

Global corporation◦ Firm that has integrated

worldwide operations through a centralized home office.

Transnational corporation◦ Firm that attempts to

balance local responsiveness and global scale via a network of specialized operating units.

© 2010 South-Western, a part of Cengage Learning. All rights reserved.

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FIGURE

15.1Types of Organizations


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International International Mergers and Mergers and AcquisitionsAcquisitions

International International Mergers and Mergers and AcquisitionsAcquisitions

Global Human Resources Management

Global Human Resources Management

Foreign Human Foreign Human ResourcesResources

Foreign Human Foreign Human ResourcesResources

Global Global CompetitionCompetition

Global Global CompetitionCompetition

Market Access Market Access OpportunitiesOpportunities

Market Access Market Access OpportunitiesOpportunities

Their production and distribution extend beyond national boundaries, making it easier to transfer technology.

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

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


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Unified Economies◦ Closely partnered nations such as the European

Union (EU) have developed into strong competitors.

◦ Promotes job growth in trading nations. Cultural Environment

◦ The communication patterns, religion, values and ideologies, education, and social structure of a host country influence how HR is conducted in that country.


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FIGURE

15.3Cultural Environment of International Business

Issues in international HRM in helping employees adapt to a new and different environment outside their own country:◦ Relocation◦ Orientation◦ Translation services


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Expatriates, or Home-country Nationals◦ Employees from the home country who are on

international assignment. Host-country Nationals

◦ Employees who are natives of the host country. Third-country Nationals

◦ Employees who are natives of a country other than the home country or the host country.


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FIGURE

15.4Changes in International Staffing over Time

Advantages:1. Hiring local citizens is generally less costly than

relocating expatriates.2. Since local governments usually want good jobs

for their citizens, foreign employers may be required to hire locally.

3. Most customers want to do business with companies they perceive to be local versus foreign.


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Work Permit, or Visa◦ Government document granting a foreign

individual the right to seek employment. Guest Workers

◦ Foreign workers invited to perform needed labor.

Apprenticeships◦ Vocational training programs in skilled trades.

Transnational Teams◦ Teams composed of members of multiple

nationalities working on projects that span multiple countries.


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1Global Laws and Pacts Prohibiting Discrimination

U.S. laws affecting firms conducting business outside the United States:

• Title VII of the Civil Rights Act of 1964

• Age Discrimination in Employment Act (ADEA)

• Americans with Disabilities Act (ADA)

International laws that require nondiscrimination in employment:

• European Union (EU)—Equal Pay Directive

• International Labour Organization (ILO)—Equal Remuneration Convention No. 100

• Organization for Economic Cooperation and Development Enterprises (OECD)—Guidelines for Multinational Enterprises

• United Nations—Global Compact

Global Manager◦ A manager equipped to run an international

business Skills Categories for Global Managers

◦ Ability to seize strategic opportunities◦ Ability to manage highly decentralized

organizations◦ Awareness of global issues◦ Sensitivity to issues of diversity◦ Competence in interpersonal relations◦ Community-building skills


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FIGURE

15.5Comparison of Advantages in Sources of Overseas Managers

1. Begin with self-selection.2. Create a candidate pool.3. Assess core skills.

• Skills considered critical to an employee’s success abroad.

4. Assess augmented skills and attributes.• Skills helpful in facilitating

the efforts of expatriate managers


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2Skills of Expatriate Managers

CORE SKILLS

Experience

Decision-making

Resourcefulness

Strategic thinking

Adaptability

Cultural sensitivity

Change management

Team building

Maturity

AUGMENTED SKILLS

Technical skills

Negotiation skills

Strategic thinking

Delegation skills

Change management


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FIGURE

15.6Expatriate Selection Criteria


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FIGURE

15.7Causes of Expatriate Assignment Failure

• Family adjustment

• Lifestyle issues

• Work adjustment

• Bad selection

• Poor performance

• Other opportunities arise

• Business reasons

• Repatriation issues

Essential training program content to prepare employees for working internationally: ◦ Language training◦ Cultural training◦ Assessing and tracking career development◦ Managing personal and family life◦ Repatriation

Culture shock◦ Perpetual stress experienced by people who settle

overseas.


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FIGURE

15.8Preparing for an International Assignment

To prepare for an international assignment, one should become acquainted with the following aspects of the host country:

1. Social and business etiquette

2. History and folklore

3. Current affairs, including relations between the host country and the United States

4. Cultural values and priorities

5. Geography, especially its major cities

6. Sources of pride and great achievements of the culture

7. Religion and the role of religion in daily life

8. Political structure and current players

9. Practical matters such as currency, transportation, time zones, and hours of business

10. The language


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3Nonverbal Communications in Different Cultures

Reviewing 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.


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FIGURE

15.9A Synthesis of Country Clusters


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FIGURE

15.10Selected Foreign-Born Executives

Chevron, David O'Reilly (Ireland)

Citigroup, Vikram Pandit (India)

Dow Chemical, Andrew Liveris (Australia)

PepsiCo, Indra Nooyi (India)

Coca-Cola, Muhtar Kent (Turkey)

Alcoa, Alain J. P. Belda (Morocco)

Eli Lily, Sydney Taurel (Morocco)

3M, George W. Buckley (Great Britain)

Eastman Kodak, Antonio Perez (Spain)

COMPANY, NAME, AND COUNTRY OF ORIGIN

Developmental and Career Advantages of an International Assignment:

◦ Increases the expatriate’s responsibilities and influence within the corporation

◦ Provides a set of unique experiences beneficial to both the individual and the firm

◦ Enhances understanding of the global marketplace

◦ Offers the opportunity to work on a project important to the organization


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4Repatriation Checklist

Before they go:• Make sure there is a clear need for the international assignment.

Don’t send someone abroad unnecessarily. Develop a clear set of objectives and expectations and time frames in which they should be met.

• Make sure that your selection procedures are valid. Select the employee and also look at and involve the employee’s family.

• Provide (or fund) language and cultural training for the employee and the employee’s family.

• Offer counseling and career assistance for the spouse.

• Establish career planning systems that reward international assignments and lead to promotion and knowledge sharing.


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4Repatriation Checklist (cont’d)

While they are away:• Jointly establish a developmental plan that focuses on the goal

to be achieved.

• Tie performance objectives to the achievement of the goal.

• Identify mentors who can be a liaison and support person from home.

• Keep communications open so that the expatriate is aware of job openings and opportunities.

• Arrange for frequent visits back home (for the employee and the family). Make certain they do not lose touch with friends and relatives.


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4Repatriation Checklist (cont’d)

When they come back home:• Throw a “welcome home” party and arrange for a meeting with

other former expatriates.

• Offer counseling to ease the transition.

• Arrange conferences and presentations to make certain that knowledge and skills acquired away from home are identified and disseminated.

• Set up an expatriate database to help other employees who go abroad later.

• Get feedback from the employee and the family about how well the organization handled the repatriation process..

Different countries have different norms for employee compensation:◦ Financial (money) incentives versus nonfinancial

incentives (prestige, independence, and influence)

◦ Individual rewards versus collectivist concerns for internal equity and personal needs

◦ General rule: Match the rewards to the values of the local culture—

create a pay plan that supports the overall strategic intent of the organization but provides enough flexibility to customize particular policies and programs to meet the needs of employees in specific locations.


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FIGURE

15.11Hourly Wages in Different Countries*

*Hourly compensation costs in U.S. dollars for production workers in manufacturing.

COUNTRY $/HOURNorway 41.05 Denmark 35.45 Germany 34.21 Netherlands 32.34 Belgium 31.85 Sweden 31.80 Switzerland 30.67 Austria 30.46 Finland 29.90 Luxembourg 27.74 United Kingdom 27.10 Australia 26.14 Ireland 25.96 Canada 25.74 Italy 25.07 France 24.90 United States 23.82

COUNTRY $/HOURJapan 20.20 Spain 18.83 Greece 16.10 Korea, Republic of 14.72 New Zealand 14.47 Israel 12.98 Singapore 8.55 Portugal 7.65 Czech Republic 6.77 Taiwan 6.43 Hungary 6.29 Hong Kong SAR (1) 5.78 Poland 4.99 Brazil 4.91 Mexico 2.75 Philippines 1.07 Sri Lanka 0.54

Hourly wages can vary dramatically from country to country.

Pay periods are different. Seniority may be an important factor. High pay rates can upset local compensation

practices. Bonuses, profit-sharing, benefits and paid

leave may be more extensive and legally required.


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Global Compensation System◦ A centralized pay system

whereby host-country employees are offered a full range of training programs, benefits, and pay comparable with a firm’s domestic employees but adjusted for local differences


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An effective international compensation program must:1. Provide an incentive to leave the United States

2. Allow for maintaining an American standard of living

3. Provide for security in countries that are politically unstable or present personal dangers

4. Include provisions for good health care

5. Reimburse the foreign taxes the employee is likely to have to pay (in addition to having to pay domestic taxes) and help him or her with tax forms and filing

6. Provide for the education of the employee’s children abroad, if necessary

7. Allow for maintaining relationships with family, friends, and business associates via trips home and other communication technologies

8. Facilitate the expatriate’s reentry home

9. Be in writing


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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


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Split Pay◦ A system whereby expatriates are given a portion

of their pay in the local currency to cover their day-to-day expenses and a portion of their pay in their home currency to safeguard their earnings from changes in inflation or foreign exchange rates

Host-Based Pay◦ Expatriate pay is comparable to that earned by

employees in a host country to which the expatriate is assigned.


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Localization◦ Adapting pay and other compensation benefits to

match that of a particular country◦ Reduces resentment among local staff members if

they are earning significantly less. Other Issues

◦ Adequacy of medical care◦ Personal security◦ Compensation policies of competitors


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Who Should Appraise Performance?◦ Home-country evaluations◦ Host-country evaluations

Adjusting Performance Criteria◦ Augmenting job duties◦ Individual learning◦ Organizational learning

Providing Feedback◦ Debriefing interview


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International Differences in Unions:◦ The level at which bargaining takes place

(national, industry, or workplace)◦ The degree of centralization of union-

management relations ◦ The scope of bargaining (parties and issues)◦ The degree to which government intervenes◦ The degree of unionization and union strength◦ The political affiliations of unions


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augmented skills

balance sheet approach

codetermination

core skills

cultural environment

culture shock

expatriates, or home-country nationals

failure rate

global compensation system

global corporation

global manager

guest workers

home-based pay

host-based pay

host country

host-country nationals

international corporation

localization

multinational corporation (MNC)

repatriation

split pay

third-country nationals

transnational corporation

transnational teams

work permit, or visa

mana3320-spring 2010 prewitt. international corporation ◦ domestic firm that uses its existing...

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host country influence

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