powerpoint presentation by charlie cook the university of west alabama 15 © 2010 south-western, a...

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

PowerPoint Presentation by Charlie CookThe University of West Alabama

PowerPoint Presentation by Charlie CookThe University of West Alabama

15

© 2010 South-Western, a part of Cengage Learning. All rights reserved. 15–2

Identify the types of organizational forms used for competing internationally.

Explain the economic, political-legal, and cultural factors in different countries that HR managers need to consider.

Explain how domestic and international HRM differ.

Discuss the staffing process for individuals working internationally.

Identify the unique training needs for international assignees and their employees

Chapter ObjectivesAfter studying this chapter, you should be able to


Identify the characteristics of a good international compensation plan.

Reconcile the difficulties of home- and host-country performance appraisals.

Explain how labor relations differ around the world.

Chapter Objectives (cont’d)After studying this chapter, you should be able to


Managing Across BordersManaging Across Borders

• International International corporationcorporation Domestic firm that uses Domestic firm that uses

its existing capabilities its existing capabilities to move into overseas to move into overseas markets.markets.

• Multinational Multinational corporation (MNC)corporation (MNC) Firm with independent Firm with independent

business units operating business units operating in multiple countries.in multiple countries.

• Global corporationGlobal corporation Firm that has integrated Firm that has integrated

worldwide operations worldwide operations through a centralized through a centralized home office.home office.

• Transnational Transnational corporationcorporation Firm that attempts to Firm that attempts to

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


FIGURE

15.1Types of Organizations


Increasing Importance of Understanding Increasing Importance of Understanding Global Human Resources ManagementGlobal Human Resources Management

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


How International Companies Affect How International Companies Affect the World Economythe World Economy

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

•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 nationalism.breaking down of barriers of nationalism.


How Does the Global Environment Influence How Does the Global Environment Influence Management?Management?

•Unified EconomiesUnified Economies Closely partnered nations such as the Closely partnered nations such as the

European Union (EU) have developed into European Union (EU) have developed into strong competitors.strong competitors.

Promotes job growth in trading nations.Promotes job growth in trading nations.

•Cultural EnvironmentCultural Environment The communication patterns, religion, values The communication patterns, religion, values

and ideologies, education, and social structure and ideologies, education, and social structure of a host country influence how HR is of a host country influence how HR is conducted in that country.conducted in that country.


FIGURE

15.3Cultural Environment of International Business


Domestic versus International HRMDomestic versus International HRM

•Issues in international HRM in helping Issues in international HRM in helping employees adapt to a new and different employees adapt to a new and different environment outside their own country:environment outside their own country: RelocationRelocation OrientationOrientation Translation servicesTranslation services


International StaffingInternational Staffing

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

international assignment.international assignment.

•Host-country NationalsHost-country Nationals Employees who are natives of the host Employees who are natives of the host

country.country.

•Third-country NationalsThird-country Nationals Employees who are natives of a country other Employees who are natives of a country other

than the home country or the host country.than the home country or the host country.


FIGURE

15.4Changes in International Staffing over Time


Hiring Host-Country NationalsHiring Host-Country Nationals

• Advantages:Advantages:1.1. Hiring local citizens is generally less costly Hiring local citizens is generally less costly

than relocating expatriates.than relocating expatriates.

2.2. Since local governments usually want good Since local governments usually want good jobs for their citizens, foreign employers may jobs for their citizens, foreign employers may be required to hire locally.be required to hire locally.

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


Recruiting InternationallyRecruiting Internationally

•Work Permit, or VisaWork Permit, or Visa Government document granting a foreign Government document granting a foreign

individual the right to seek employment.individual the right to seek employment.

•Guest WorkersGuest Workers Foreign workers invited to perform needed Foreign workers invited to perform needed

labor.labor.

•ApprenticeshipsApprenticeships Vocational training programs in skilled trades.Vocational training programs in skilled trades.

•Transnational TeamsTransnational Teams Teams composed of members of multiple Teams composed of members of multiple

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


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


Selecting Global ManagersSelecting Global Managers

•Global ManagerGlobal Manager A manager equipped to run an international A manager equipped to run an international

businessbusiness

•Skills Categories for Global ManagersSkills Categories for Global Managers Ability to seize strategic opportunitiesAbility 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 Community-building skillsCommunity-building skills


FIGURE

15.5Comparison of Advantages in Sources of Overseas Managers


Selecting Global ManagersSelecting Global Managers

1.1. Begin with self-Begin with self-selection.selection.

2.2. Create a candidate pool.Create a candidate pool.

3.3. Assess core skills.Assess core skills.• Skills considered critical Skills considered critical

to an employee’s success to an employee’s success abroad.abroad.

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

the efforts of expatriate the efforts of expatriate managersmanagers


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


FIGURE

15.6Expatriate Selection Criteria


FIGURE

15.7Causes of Expatriate Assignment Failure

• Family adjustment

• Lifestyle issues

• Work adjustment

• Bad selection

• Poor performance

• Other opportunities arise

• Business reasons

• Repatriation issues


Training and DevelopmentTraining and Development

•Essential training program content to Essential training program content to prepare employees for working prepare employees for working internationally: internationally: Language trainingLanguage training Cultural trainingCultural training Assessing and tracking career developmentAssessing and tracking career development Managing personal and family lifeManaging personal and family life RepatriationRepatriation

•Culture shockCulture shock Perpetual stress experienced by people who Perpetual stress experienced by people who

settle overseas.settle overseas.


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


3Nonverbal Communications in Different Cultures


Training MethodsTraining Methods

•Reviewing available information about the Reviewing available information about the host company: books, magazines, video host company: books, magazines, video tapes.tapes.

•Conversations with host country natives.Conversations with host country natives.

•Sensitivity training to become familiar with Sensitivity training to become familiar with the customs and overcome prejudices.the customs and overcome prejudices.

•Temporary assignments to encourage Temporary assignments to encourage shared learning.shared learning.


FIGURE

15.9A Synthesis of Country Clusters


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


Assessing and Tracking Career DevelopmentAssessing and Tracking Career Development

•Developmental and Career Advantages of Developmental and Career Advantages of an International Assignment:an International Assignment: Increases the expatriate’s responsibilities and Increases the expatriate’s responsibilities and

influence within the corporationinfluence within the corporation

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

Enhances understanding of the global Enhances understanding of the global marketplacemarketplace

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


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.


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.


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..


Global Compensation ChallengesGlobal Compensation Challenges

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

nonfinancial incentives (prestige, nonfinancial incentives (prestige, independence, and influence)independence, and influence)

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

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

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


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


Compensation of Host-Country EmployeesCompensation of Host-Country Employees

• Hourly wages can vary dramatically from Hourly wages can vary dramatically from country to country.country to country.

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

compensation practices.compensation practices.• Bonuses, profit-sharing, benefits and paid Bonuses, profit-sharing, benefits and paid

leave may be more extensive and legally leave may be more extensive and legally required.required.


Compensation of Host-Country ManagersCompensation of Host-Country Managers

• Global Compensation Global Compensation SystemSystem A centralized pay system A centralized pay system

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


Compensation of Expatriate ManagersCompensation of Expatriate Managers• An effective international compensation program must:An effective international compensation program must:

1.1. Provide an incentive to leave the United StatesProvide an incentive to leave the United States

2.2. Allow for maintaining an American standard of livingAllow for maintaining an American standard of living

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

4.4. Include provisions for good health careInclude provisions for good health care

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

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

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

8.8. Facilitate the expatriate’s reentry homeFacilitate the expatriate’s reentry home

9.9. Be in writingBe in writing


Expatriate Compensation SystemsExpatriate Compensation Systems

• Home-Based PayHome-Based Pay Pay based on an expatriate’s home country’s Pay based on an expatriate’s home country’s

compensation practicescompensation practices

• Balance-Sheet ApproachBalance-Sheet Approach A compensation system designed to match A compensation system designed to match

the purchasing power in a person’s home the purchasing power in a person’s home countrycountry

1.1. Calculate base payCalculate base pay

2.2. Figure cost-of-living allowance (COLA)Figure cost-of-living allowance (COLA)

3.3. Add incentive premiumsAdd incentive premiums

4.4. Add assistance programsAdd assistance programs


Expatriate Compensation Systems (cont’d)Expatriate Compensation Systems (cont’d)

•Split PaySplit Pay A system whereby expatriates are given a A system whereby expatriates are given a

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

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

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


Expatriate Compensation Systems (cont’d)Expatriate Compensation Systems (cont’d)

•LocalizationLocalization Adapting pay and other compensation benefits Adapting pay and other compensation benefits

to match that of a particular countryto match that of a particular country Reduces resentment among local staff Reduces resentment among local staff

members if they are earning significantly less.members if they are earning significantly less.

•Other IssuesOther Issues Adequacy of medical careAdequacy of medical care Personal securityPersonal security Compensation policies of competitorsCompensation policies of competitors


Performance Appraisal Performance Appraisal of International Managersof International Managers

•Who Should Appraise Performance?Who Should Appraise Performance? Home-country evaluationsHome-country evaluations Host-country evaluationsHost-country evaluations

•Adjusting Performance CriteriaAdjusting Performance Criteria Augmenting job dutiesAugmenting job duties Individual learningIndividual learning Organizational learningOrganizational learning

•Providing FeedbackProviding Feedback Debriefing interviewDebriefing interview


The Labor Environment WorldwideThe Labor Environment Worldwide

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

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

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


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

powerpoint presentation by charlie cook the university of west alabama 15 © 2010 south-western, a...

Documents

cengage learning

global scale

international assignees

international companies

international hrm

different countries

multiple countries

political impact