CH-14 Establishing HRM Practices in Foreign Countries – Human Resource Management: A Managerial Tool for Competitive Advantage : Book Guide

Chapter 14 Establishing HRM Practices in Foreign Countries LEARNING OBJECTIVES After reading this chapter, students should be able to: • Understand why companies establish foreign operations and what must be done to maintain competitive advantage there. • Understand why a company must account for cultural differences when establishing foreign operations. • Explain why companies often choose expatriates to manage foreign operations. • Describe the HRM issues regarding the use of expatriates. • Describe the HRM issues regarding the management of host-country employees. CHAPTER OUTLINE AND LECTURE 14-1 Gaining Competitive Advantage This chapter illustrates how a firm can lose competitive advantage as a result of ineffective HRM practices. 14-1a Opening Case: Losing Competitive Advantage at General Electric General Electric (GE) purchased a French medical equipment manufacturing firm as part of its new corporate identity. GE tried to use American values and management in hopes of generating $25 million in profits by the end of the first year. The French were insulted by having to wear the same T-shirts. They resented the GE flags and the perceived cocky American attitudes. The accounting system had to compromise, and in the process, time, money, and goodwill were lost. To compensate for the first year $25 million dollar loss, cost-cutting measures of massive layoffs and closing of plants was instituted. The result? Many French managers and engineers left to take jobs elsewhere, reducing the workforce by 1,500 people. This created a HRM nightmare and a portion of GE’s competitive advantage was lost in this industry. Cross-cultural misunderstandings and a poor HRM strategy were the causes. What could GE managers have done differently? What would have worked better? Do the students see any other inherent problems? Is ethnocentrism present? 14-1b Linking HRM Practices Overseas to Competitive Advantage After World War II, U.S. manufacturers and products ruled, generating much profit with little competition. Two major considerations are addressed below: • Staying competitive: The need to compete in overseas markets is vital today for many U.S. firms because many foreign firms that sell in America undersell domestic ones. Most of the largest firms expect their foreign growth to exceed U.S. growth during the next decade. The most common way to compete for a U.S. firm is to set up its own operations overseas called wholly owned subsidiary. An alternative is for a domestic and foreign firm to partner up in a joint venture. • The impact of international HRM practices on employee motivation, satisfaction, and performance must be studied and understood. Employees must be trained to work in cross-cultural environments. Business practices must be adapted to the foreign culture to be successful. An example of a common problem is that American and Japanese managers seem to be unable to work together effectively. Generate a discussion on why so many foreign students are now attending American Universities. What is the attraction? Must universities compete for local and U.S. students, as well as foreign students? Is education unavailable in their countries or is admittance too competitive? Do the prospects of obtaining a “good” job improve with an American college education? 14-2 HRM Issues and Practices This chapter is geared toward HR issues that arise in the context of subsidiaries and joint ventures. Culture and cultural differences are presented. HRM practices must be formed and implemented within an international context. U.S. managers must be deployed overseas and HR practices must be set up at foreign locations. 14-2a Understanding Cultural Differences Examine these: • Managers must study the culture of a country, or that society’s set of assumptions, values, artifacts, and rules about social interaction. • The culture and resulting behaviors are important because they provide a mental road map, traffic signals, and goals to follow. Culture is programmed into each of us. Managers need to study foreign culture extensively. • Cross-cultural differences in the workplace consist of important expectations and rules about how people are to act in the workplace. American values can clash with those of other countries in which we may work. Go to Exhibit 14-1 to see these sharp contrasts. An example is that of the way Americans and Japanese handle and attempt to settle personal conflicts. Americans bring them out in the open and the Japanese avoid them and deal with them behind closed doors so respect of their peers will not be lost. • How people react to cultural improprieties can be predicted fairly accurately in our own culture. When cultural rules are violated, the “guilty party” is often condemned or punished where the degree of condemnation depends on two factors: (1) the extent to which the broken rule is widely shared among a cultural group’s members and (2) the extent to which the rule is deeply held and viewed as being important or sacred. Even though it can be very difficult, managers must attempt to learn the rules of culture of other countries and abide by them. Examine Exhibit 14-1 very carefully. What is the best way to gain an understanding of the non-American viewpoints? Provide examples of implementing a few HR practices in another culture. Let students take the positions of Americans and foreign workers. Let them write a brief script of what might be said in a conversation where they try to reach a common understanding of the HR practices. 14-2b The Use of Expatriates The use of expatriates is vitally important for U.S. firms to become established in foreign markets. Because the transformation is difficult, an estimated 35 to 70 percent of American expatriates perform poorly in their overseas jobs. The appropriate use of expatriates can enhance competitive advantage. Expatriates’ legal rights and HRM practices must be understood. Consider all of this. • The use of expatriates and competitive advantage is an important consideration. A company must decide whether to fill its key management positions with them or managers from the host country. Most firms fill at least some of them with expatriates to enhance competitive advantage in the areas of succession planning (developing future managerial talent), coordination and control systems, and informational needs. • Expatriate rights under the Civil Rights Act saw a major change in 1991 when the Supreme Court ruled that Title VII does not afford EEO protection to U.S. citizens working overseas. However, the U.S. Congress placed a provision in the Civil Rights Act of 1991 that allows for some protection and for some lawsuits. • Selecting expatriates depends on the individuals’ personality more than their technical skills. A successful candidate should possess the ability to handle stress, create reinforcement substitution, ability to develop relationships, and perceptual skills. • Training expatriates to adjust to living and working conditions in new cross-cultural situations is a must. We find that 65 percent go overseas with no training. Of the firms that do offer training, the training is often not very rigorous in nature and inferior. Firms should not be surprised to learn that when expatriates struggle to succeed overseas they receive virtually no help when preparing to meet the varied challenges of their new assignments. • Appraising expatriates’ job performances overseas is quite challenging. They often receive inappropriate performance appraisals because the performance criteria common to the U.S. are often superimposed onto an expatriate manager even though those criteria might not make sense in the foreign culture. Firms must construct criteria according to each subsidiary’s unique situation. Another challenge is to find the right person to do the appraisal of the manager’s performance. The chances of rater error increases greatly. Rater bias also gets in the way of fair results. There are no easy solutions. Multiple raters should be used; some of them should have lived and worked in the country under question. Expatriates must understand that their performance may be misunderstood and go unappreciated. • Compensating expatriates comes at a premium—generally to entice them to accept overseas assignments. Expatriate’s lucrative packages allow many to live a life of luxury in the host nation that will be difficult or impossible to match when they return home. Host-national managers, who are the expatriates’ peers and superiors, do not receive such extravagant compensation packages. As a result, they may become quite jealous and resentful. • Repatriation means an expatriate is coming back home to work. HR and managers need to be aware of four challenges that will face him or her: (1) Most are not told what their job assignments will be prior to returning. (2) They often return to “lesser” jobs that do not relate to the overseas ones. (3) Expatriates may have difficulty readjusting to their native culture. (4) They may have become accustomed to a higher quality of life. Management needs to be understanding of the potential problems that may be associated with the above and make plans to deal with them. • HRM interventions, although lacking in most companies, are needed to provide mentoring, formalized career planning, and communication systems before the expatriate leaves for the host country. Experience shows the time, effort, and money spent will enhance the success of the expatriate and the overseas operation. Let students think through the eight considerations discussed in Section 14-2b, and, narrow their choices down to two most difficult considerations. Ask students to defend their rationale with an example of a management job, a company, and a host nation. 14-2c Developing HRM Practices in Host-National Countries Companies must also consider cultural influence when devising HRM practices for host-national employees working within a foreign subsidiary. Help can be provided in this way: • Adjust HRM practices to the norms and culture of the host country. A rule of thumb is “Knowledge of the laws, practices, and employer obligations in each country should form the basis for all international human resource practices.” • Developing training programs for host-national workers is a must. The firm needs to understand how the new culture views the educational process and apply effective programs and recruit competent teachers. • Developing compensation systems is difficult in these settings. Managers need to understand what motivates employees in each culture and design the system around these motivators. American systems of monetary and nonmonetary rewards must be carefully weighed against the values of the new culture. Poorly-applied compensation systems can damage productivity and morale of the workers. 14-3 The Manager’s Guide How would the manager’s job differ in a foreign setting? What are the major issues to deal with? How can they be dealt successfully? Study the following. 14-3a International HRM Issues and the Manager’s Job Either subordinates are sent to work in another country or the managers themselves become expatriates. Managers may become involved in selecting the expatriate, and may be responsible for appraising performance and merit pay considerations. When the manager becomes the expatriate, he or she must be able to adapt management behavior to the host country’s culture. Training is the key. 14-3b How the HRM Department Can Help The HR department plays a major role in the expatriate experience. HR professionals advise management on who should be sent, what kind of training is needed, and the type of compensation package. They decide how to adjust HR policies and procedures, modify performance appraisal systems, and integrate career development, training programs, and succession planning. 14-3c HRM Skill-Building for Managers Often expatriates are sent to Japan and Mexico. Here we find some tips/advice to help along the way. Japanese business norms are very formal and well-defined. Guidelines on properly exchanging business cards in this country are provided in the text. Japanese business culture also demands that you conduct business at restaurants, clubs, bars, and other off-site locations. By not observing/following proper proprieties, you will be seen as inferior and may very well lose the business deal. Mexican culture contains a number of business practices that differ from America. Most Mexican firms have a bureaucratic structure with power vested at the top. Workers prefer that their managers keep a formal, somewhat distant relationship with them. They frown upon such practices as employee empowerment, open communication channels, and employee ownership. Mexicans value harmony and have a low tolerance for adversarial relations. Obedience and respect are more important than independence and confrontation. It is much more important for Mexicans to have a congenial working environment than it is to make more money. Pay-for-performance programs would be avoided because they create social distance among employees. Learning about the culture in which you will work is essential and adjusting to the norms is crucial to business success. Allow students to learn about either Japanese or Mexican business culture. Tell them to come to class prepared for providing a briefing about the culture. Ask them to use a variety of sources, such as a person who has lived there or reliable information from the Internet. KEY TERMS Artifacts: Tangible things that represent the superficial aspects of a country’s culture. Assumptions: A society’s beliefs that have evolved from its attempts to adjust to the world around it. Conversational currency: A relationship skill in which an expatriate inserts social and cultural tidbits and trivia into conversations with host-national employees. Culture: A society’s set of assumptions, values, and rules about social interaction. Expatriate: A professional/managerial employee moved from one country to, and for employment in, another country. Joint venture: A company operating in a foreign country that is dually owned by an American and foreign firm. Reinforcement substitution: The ability to find substitutes for pleasurable pursuits that are unavailable in a new culture. Repatriates: Expatriates who have returned home. Values: The rules of societal proprietary and impropriety that are shared by people within a culture. Wholly owned subsidiaries: American-owned companies operating in a foreign country. REVIEW QUESTIONS 1. Which of the following terms is not included in the definition of culture? a. beliefs b. assumptions c. rules d. values Answer: a Rationale: Culture is a society’s set of assumptions, values, and rules about social interaction. 2. Knowledge of culture allows us to a. predict fairly accurately how individuals “should” behave in a variety of situations. b. predict exactly how individuals will behave in a variety of situations. c. predict the level of education of the workforce. d. predict the level of motivation of the workforce. Answer: a Rationale: Culture allows us to predict fairly accurately how others “should” behave in a variety of situations. Those who break cultural rules threaten that social predictability. 3. A professional/managerial employee who is moved from one country to, and for employment in, another country is called a a. host manager. b. foreign nationalist. c. expatriate. d. successor. Answer: c Rationale: An expatriate is “normally a professional/managerial employee moved from one country to, and for employment in, another country.” 4. Regarding international assignments, the Civil Rights Act of 1991 a. offers little protection to expatriates—the cultural values of the host country take precedence. b. is generally interpreted to afford EEO protection to expatriates. c. must be interpreted on a case-by-case basis to determine the rights of expatriates. d. protects expatriates only in certain countries. Answer: b Rationale: The courts had generally supported the idea that the Civil Rights Act affords EEO protection to expatriates. The U.S. Congress placed a provision in the Civil Rights Act of 1991 that provides . . . coverage [to] U.S. citizens employed in a foreign country, provided that compliance with this provision would not cause the employer to violate the law of the foreign country in which the workplace is located. 5. Which of the following statements best describes the state of training for expatriates? a. Nearly all expatriates get extensive hands-on training in how to work with people with diverse backgrounds. b. Nearly all expatriates get low-level training that consists of watching films, listening to lectures, and talking with former expatriates. c. The majority of expatriates receive no training to help them succeed in their new assignment. d. Most expatriates receive training in business-related topics (e.g., global markets, global compensation) but little training in cultural matters related to their assignment. Answer: c Rationale: Most companies fail to give expatriates the training they need. For instance, researchers have found that only 35 percent of U.S. firms offer any pre departure cross-cultural or language training for their expatriate managers. Thus, roughly 65 percent of American expatriates go overseas without any training whatsoever. 6. Which of the following statements describes a significant problem when using host managers to evaluate expatriate performance? a. The host manager lacks commitment to the process of performance appraisal. b. The host manager has inadequate access to data for judging performance. c. The host manager consistently misinterprets the behavior of expatriates. d. The language barrier makes it impossible for host-managers to evaluate performance. Answer: c Rationale: Even if such an appraisal were made by a host-national manager who better understood the expatriate’s challenges, its validity would not be assured. Individuals from different cultures consistently misinterpret each other’s behavior, possibly biasing the appraisals. 7. Individuals returning from international assignments are referred to as a. repatriates. b. expatriates. c. returned nationals. d. corporate aliens. Answer: a Rationale: Eventually, expatriate managers must return home and find their place back in the home company. Returning expatriates are called repatriates. 8. Which of the following is not one of the problems faced by individuals returning from an international assignment? a. Individuals are not told their job assignments upon return. b. Retirement savings accumulated while on assignment is subject to the repatriate tax. c. Individuals assume jobs with much less autonomy and authority than they had while on assignment. d. Individuals have trouble adjusting to the native culture. Answer: b Rationale: Companies often do not properly prepare for repatriation. Four problems have surfaced. First, research shows that between 60 to 70 percent of repatriates are not told what their job assignments will be prior to returning home. Second, repatriates often return to jobs that require much less autonomy and authority than the jobs they held overseas. Third, expatriates may have difficulty readjusting to their native culture when returning home. Fourth, expatriates may have become used to a higher quality of life in their host country. 9. When designing a compensation system for international operations, it is best to a. build the system around the worldwide interest in money, praise, and benefits. b. focus on salary because the population in most foreign countries is not accustomed to receiving generous benefits packages. c. design the system around those factors that motivate the local workforce. d. make the system as similar to the stateside system as possible so that the transition from expatriate will be a smooth one. Answer: c Rationale: People around the world desire fair compensation for their work. However, cultural values and norms determine what people consider appropriate remuneration for their labor. The “trick” in designing compensation systems in international environments is to understand what motivates employees in each culture and to design the system about those motivators. 10. Which of the following training techniques would be least successful in an Asian culture? a. lecture b. training video c. instructional manual d. role-playing Answer: d Rationale: Before setting up a training program in a foreign subsidiary, HR professionals must understand how that culture views the educational process. For instance, in most Asian cultures, education is considered to be a very authoritarian phenomenon. The teacher is seen as the expert, as someone students should respect. Teachers impart knowledge through one-way conversation: The teacher tells, the student listens. Students do not ask questions, and teachers do not solicit students’ opinions. The atmosphere is formal and respectful towards authority. DISCUSSION QUESTIONS 1. Describe the main organizational forms companies use when internationalizing their operations? The most common way medium to large companies “go international” is simply to set up operations overseas that they own; such operations are called wholly owned subsidiaries. In some instances, firms may join up with foreign firms and create new companies, called joint ventures. 2. Define culture. Culture: A society’s set of assumptions, values, and rules about social interaction. 3. Why do companies use expatriate managers, rather than local managers, to oversee their foreign operations? • Expatriate managers can enhance competitive advantage in at least three areas: succession planning, coordination and control, and informational needs. • Succession Planning ○ Firms use overseas assignments to “internationalize” future top managers. • Coordination and Control ○ Expatriates are sent overseas to do such things as open new markets, facilitate a merger or acquisition, set up new technologies and systems, and strategically coordinate and control foreign operations, all of which can enhance a company’s competitive advantage. ○ These managers can help ensure that such operations are congruent with corporate strategy and policy. • Informational Needs ○ Expatriates can communicate subsidiaries’ needs and concerns back to corporate headquarters in a timely and effective manner. ○ Effective expatriate managers can communicate their useful market knowledge back to corporate managers, who may be ignorant about global markets. Expatriates can usually communicate such information more effectively than host-national managers because expatriates know the people back at headquarters and thus better understand their informational needs. 4. List and briefly describe the skills expatriates need in order to be successful. • Ability to handle stress. • Reinforcement substitution—the ability to find substitutes for pleasurable pursuits that are unavailable in a new culture. • Ability to develop relationships with host nationals • Perceptual skills ○ Flexibility of one’s belief systems. ○ Ability to avoid being judgmental about the belief and value systems of the host culture. ○ Ability to make flexible attributions about why host nationals behave the way they do. ○ High tolerance for uncertainty. 5. What are the variables that cause performance appraisals of expatriates to often be invalid? • Invalid Performance Criteria ○ Expatriates often receive inappropriate performance appraisals because the performance criteria common to the United States are often superimposed onto an expatriate manager even though those criteria might not make sense in the foreign culture. • Rater Competence ○ Home office supervisors who have never worked or lived overseas often complete expatriates’ appraisals. Lacking an understanding of the social and business contexts in which the work is performed, these appraisers have no feel for the unique challenges faced by expatriates. Under these circumstances, the chance of rater error increases dramatically. • Rater Bias ○ Individuals from different cultures consistently misinterpret each other’s behavior, possibly biasing the appraisals. 6. What problems are associated with the design of compensation packages for expatriates? • Company allowances often enable expatriates to live much better overseas than they would back in the United States. In some instances, they are able to afford maids, chauffeurs, gardeners, nannies, and so forth. Expatriates can become used to their new lifestyle, making it difficult to go back to the old ways of living and budgeting when they return home. • Moreover, these packages can hinder the internal consistency of the company’s pay system, causing morale problems. 7. Describe the elements of an “ideal” program for managing expatriate managers. • Mentoring ○ Companies should assign official mentors to expatriates taking overseas assignments. Mentors should then (1) keep track of the expatriates performance in order to keep parent company executives appraised of the expatriate’s successes and experiences, (2) keep expatriates updated regularly about what is going on in the parent company, and (3) assist the repatriate in finding a job in the parent company that would make use of his or her international expertise. • Formalized Career Planning ○ Companies need to integrate overseas assignments into their succession planning systems. If managers truly need international experience in order to be a top executive in the next century, then they must be properly selected and trained. • Communication Systems ○ Companies must encourage a flow of information back and forth between expatriate managers and parent company managers to ensure that expatriate managers are not forgotten. Expatriates can also keep abreast of company news via the Internet. 8. What is the key principle to remember when adjusting headquarters HRM practices to foreign subsidiaries? Give an example of the principle from the text. Firms must pay attention to how the HRM activities of its subsidiaries are traditionally carried out, and, for the most part, firms must adapt to host culture’s norms and values that guide human resource practices in that country. 9. Describe the typical expatriate manager’s compensation package. • In addition to base salary, expatriates receive a variety of financial incentives to accept overseas assignments, such as: ○ Foreign service premiums ○ Hardship allowances ○ Cost of living allowances ○ Housing allowances ○ Utility allowances ○ Furnishing allowances ○ Education allowances ○ Home leave allowances ○ Relocation allowances ○ Medical allowances ○ Car and driver allowances ○ Club membership allowances ○ Taxes 10. Give three examples that illustrate how work-related behaviors are associated with cultural values. 1. Collectivism vs. Individualism: In collectivist cultures (e.g., Japan), teamwork and group harmony are prioritized, leading to collaborative work behaviors. In contrast, individualistic cultures (e.g., the USA) encourage self-promotion and personal achievement. 2. Power Distance: In high power distance cultures (e.g., India), employees may defer to authority and avoid challenging managers, fostering a hierarchical work environment. Low power distance cultures (e.g., Denmark) promote open communication and egalitarian practices. 3. Uncertainty Avoidance: Cultures with high uncertainty avoidance (e.g., Greece) tend to favor structured environments with clear rules, leading to meticulous planning and risk-averse behaviors. Conversely, cultures with low uncertainty avoidance (e.g., Sweden) embrace flexibility and innovation, encouraging experimentation. 11. Describe the responsibilities a manager must assume when one of his or her subordinates is selected as an expatriate. When one of the manager’s subordinates goes overseas as an expatriate, the manager often participates in the selection decision. Managers may also continue managing some aspects of the expatriate’s job. For example, the manager may be responsible for performance appraisal and merit pay recommendations. 12. Describe how one should exchange business cards in Japan. • Keep your business card (meishi—pronounced “may-shee”) handy at all times so you can hand it out immediately upon meeting someone, without fumbling around. • Stand when you give your meishi, and present your meishi by using one hand. • Hold out your meishi with the writing facing the recipient. Be sure to pronounce your name and your company name clearly. • The visiting party should be the first to give his or her meishi. • Receive your new acquaintance’s meishi with both hands. Scan it immediately for vital information. • Try to use the name of your counterpart in the course of the conversation. • Do not play around with the meishi once received, but put it away safely in a cardholder. • Academic degrees (Ph.D., M.S., etc.) should not be printed on the card because the Japanese may consider them pretentious. • The standard meishi measures 9 cm x 5.5 cm. • Store your meishi in a file and follow up your initial contact with occasional calls and appropriate seasonal greetings. EXPERIENTIAL EXERCISES Understanding Culture’s Influence Overview: The purpose of this exercise is to help the students develop a better understanding about the degree to which your own behaviors are influenced by our culture’s values and assumptions about the world. Suggested approach: Students are required to participate in the exercise step by step. During the exercise they have to carefully analyze the various criteria and how people react to such cultural improprieties. Referring to Section 14-2a will help students arrive at a conclusion. Steps 1. Review the following background information: Your group is a team of consultants that has been hired by a large Japanese subsidiary based in the United States. This subsidiary has had problems with their Japanese expatriates who have been assigned to work in the United States. Many of them find our business practices difficult to adjust to—they need to understand why we behave the way we do. The key part of the training program is to teach these Japanese expatriates the link between specific American business behaviors and the underlying values and assumptions that drive those behaviors. Particularly, the Japanese expatriates are having a difficult time understanding why Americans: a. Change jobs so frequently. b. Are very informal with people in the office—even with their superiors. c. Do not take a long-range view in strategic planning. d. Are so direct in their speech with one another, and rarely apologize for mistakes. e. Make decisions so quickly without long, careful analysis. f. Prefer to be evaluated as individuals rather than as groups. 2. Divide into small groups of five to seven people. 3. Link the values of the American culture with the behaviors in step 1. The group should develop a written list that specifies at least one reason for each of these behaviors. 4. Compare your findings with those of other groups. Upon what did you agree? Disagree? Could you reach a consensus among the groups? CASES XECORP’s Decision to Enter Germany Objective: Get students to begin thinking about the HRM issues that companies must face when deciding to go international. What to do: Cover this case prior to your lecture on the use of expatriates. 1. This situation is not all that unusual in the world of international business: namely, having to confront a task about which you know little. How should Linda go about her task? Outline the steps she must take to come up with a good report. • Linda needs to make a list of the HRM practices that are most impacted by this move. • The company must determine what positions will need to be filled by expatriates and how these individuals will be selected, trained, compensated, appraised, and how they will be “repatriated.” • In addition Linda must also address the issue of establishing HRM practices in Germany. In order to do this she must learn about the German culture and that country’s approach to HRM. In order to find this information she needs to conduct research via the Internet or by visiting a local library. 2. Analyze the weaknesses in top management’s decision to buy this factory in Germany. What have they not considered in this decision? • Does Germany have the natural resources and skilled personnel? • What are the costs of labor, materials, and financing in Germany? • What are Germany’s tax rates? • Student answers may vary. A Great Opportunity at Welingen Chemical Objective: Help students understand expatriate issues from the employee’s point-of-view. What to do: Analyze this case after your lecture on the use of expatriates. 1. Are there factors that John and Victoria are not taking into consideration in making this decision to accept this offer? If so, what are they? • There are several factors that John and Victoria have not considered in taking this offer. Those factors include: ○ Difficulties adjusting to a new culture. ○ Missing family and friends. ○ Missing some enjoyable aspects of life (i.e., sports, theater, etc.). ○ How their children will adjust to this new situation and lifestyle. 2. If you were John and Victoria’s best friend, what advice would you give them based on your reading of this chapter? Be specific in your advice and defend your rationale. Student answers may vary. CRITICAL THINKING EXERCISES 1. What could GE managers have done differently? What would have worked better? Do the students see any other inherent problems? Is ethnocentrism present? 2. Generate a discussion on why so many foreign students are now attending American Universities. What is the attraction? Must universities compete for local and US students, as well as foreign students? Is education unavailable in their countries or is admittance too competitive? Do the prospects of obtaining a “good” job improve with an American college education? 3. Examine Exhibit 14-1 very carefully. What is the best way to gain an understanding of the non-American viewpoints? Provide examples of implementing a few HR practices in another culture. Let students take the positions of Americans and foreign workers. Let them write a brief script of what might be said in a conversation where they try to reach a common understanding of the HR practices. 4. Let students think through the eight considerations discussed in Section 14-2b, and narrow their choices down to two of the most difficult considerations. Ask students to defend their rationale with an example of a management job, a company, and a host nation. 5. Allow students to learn about either Japanese or Mexican business culture. Tell them to come to class prepared for show and tell about the culture. Ask them to use a variety of sources, such as a person who has lived there or reliable information from the Internet. ESSAY QUESTIONS 1. Explain what wholly owned subsidiaries and joint ventures are. Describe how they are different. Wholly Owned Subsidiaries are companies fully owned by another company (the parent company), meaning the parent has complete control over operations, profits, and strategic decisions. Joint Ventures involve two or more parties creating a new business entity, sharing ownership, resources, and profits according to an agreed-upon arrangement. Key Differences: • Ownership: Wholly owned subsidiaries are fully owned by one entity, while joint ventures involve shared ownership. • Control: The parent company has complete control over a wholly owned subsidiary, whereas control in a joint venture is shared between the partners. • Risk and Profit Sharing: In a wholly owned subsidiary, the parent bears all risks and retains all profits; in a joint venture, risks and profits are distributed among the partners. 2. Define what a culture is and tell how values and assumptions are involved in a culture. Culture is the shared set of beliefs, behaviors, norms, values, and practices that characterize a group or society. It shapes how individuals perceive the world and interact with each other. Values are the core principles and standards that guide behavior within a culture, such as respect, freedom, or community. Assumptions are the underlying beliefs that are often taken for granted and form the foundation of a culture. They influence how values are interpreted and enacted. Together, values and assumptions shape a culture's identity and influence social norms and practices. 3. What is an expatriate and what challenges do expatriate managers and employees face? An expatriate is an employee who is sent to work in a foreign country, typically to manage operations, transfer knowledge, or develop international markets. Challenges Expatriate Managers and Employees Face: 1. Cultural Adjustment: Adapting to different cultural norms, values, and communication styles can be difficult and may lead to culture shock. 2. Work-Life Balance: Managing personal and family life in a new environment can be challenging, affecting overall well-being. 3. Language Barriers: Limited proficiency in the local language can hinder effective communication and integration into the workplace. 4. Isolation: Being away from familiar social networks can lead to feelings of loneliness and disconnection. 5. Regulatory and Legal Issues: Navigating visa requirements, tax laws, and local employment regulations can be complex and time-consuming. 4. There are two options that an expatriate can consider when he is trying to use reinforcement substitution. Describe the two options. When an expatriate considers reinforcement substitution, they have two main options: 1. Positive Reinforcement: This involves providing rewards or incentives for desired behaviors. Expatriates can use positive reinforcement to encourage local employees to adopt new practices or align with organizational goals, enhancing motivation and performance. 2. Negative Reinforcement: This option entails removing an undesirable element when a desired behavior occurs. For example, an expatriate might eliminate bureaucratic hurdles or reduce oversight once local employees demonstrate competence, thereby encouraging independence and fostering a more productive work environment. 5. Outline three cognitive skills, termed perceptual skills, that can influence adjustment to a new culture. Here are three perceptual skills that can influence adjustment to a new culture: 1. Cultural Awareness: The ability to recognize and understand cultural differences, including customs, values, and social norms, which aids in navigating new environments effectively. 2. Empathy: The capacity to understand and share the feelings of others, helping expatriates connect with local individuals and build supportive relationships. 3. Observation: The skill of attentively observing behaviors and interactions within the new culture, enabling expatriates to adapt their own behaviors and communication styles accordingly. 6. Summarize what a hardship allowance is when given to expatriates. A hardship allowance is additional compensation provided to expatriates to offset the difficulties and challenges associated with living and working in a foreign country, especially in locations with adverse conditions. This allowance is intended to compensate for factors such as lower living standards, safety concerns, or lack of amenities, helping to make the assignment more attractive and financially viable. 7. To assure that a company’s American employees can successfully work side by side with those from other cultures, HR professionals can advise management regarding HRM concerns. Describe three of these concerns. Here are three HRM concerns that HR professionals can advise management on to ensure successful collaboration between American employees and those from other cultures: 1. Cultural Training: Providing cross-cultural training programs to enhance understanding of different cultural norms, values, and communication styles, helping employees navigate interactions effectively. 2. Diversity and Inclusion Policies: Developing and implementing policies that promote inclusivity and respect for diverse perspectives, ensuring all employees feel valued and integrated into the workplace. 3. Conflict Resolution: Establishing clear procedures for addressing and resolving cultural misunderstandings or conflicts, fostering a supportive environment for open dialogue and collaboration. 8. Explain how the Japanese culture is different from the American culture from a business standpoint. Name one important thing to remember when exchanging business cards with a Japanese person. From a business standpoint, Japanese culture emphasizes collectivism, hierarchy, and relationship-building, while American culture tends to value individualism, directness, and efficiency. In Japan, building trust and long-term relationships is crucial, whereas Americans may focus more on quick results and straightforward communication. Important Note on Business Cards: When exchanging business cards (known as "meishi") with a Japanese person, it is essential to present the card with both hands, ensuring the card is facing the recipient. This shows respect and acknowledges the importance of the exchange. 9. Explain how the Mexican culture is different from American culture by describing four values that American managers need to remember when working with Mexican employees. Here are four values that highlight the differences between Mexican and American cultures, which American managers should consider when working with Mexican employees: 1. Familism: In Mexico, family ties are very important, often influencing work relationships and decisions. American managers should recognize the significance of family commitments and their impact on employee availability and priorities. 2. Personal Relationships: Building trust through personal relationships is essential in Mexican culture. American managers should invest time in establishing rapport and fostering connections with employees before diving into business matters. 3. Respect for Authority: Mexican culture typically respects hierarchy and authority more than American culture. Managers should be mindful of this and communicate decisions with consideration for employees' respect for their roles. 4. Indirect Communication: Mexicans may prefer indirect communication to avoid confrontation. American managers should be attentive to non-verbal cues and subtle hints, allowing space for employees to express concerns without direct confrontation. 10. Chapter 14 deals with five main objectives. Briefly explain each of the following. a. Why do companies establish foreign operations and what must be done to maintain competitive advantage there? b. Why must a company account for cultural differences when establishing foreign operations? c. What are the reasons why companies often choose expatriates to manage foreign operations? d. HRM issues regarding the use of expatriates. e. HRM issues regarding the management of host-country employees. a. Establishing Foreign Operations: Companies expand internationally to access new markets, resources, or talent, and to diversify risk. To maintain a competitive advantage, they must adapt strategies to local conditions, invest in employee training, and ensure effective communication. b. Cultural Differences: Understanding cultural differences is crucial for successful operations abroad. Misunderstanding local customs and values can lead to ineffective communication, poor employee relations, and operational failures. c. Choosing Expatriates: Companies often select expatriates for their foreign operations due to their familiarity with corporate culture, expertise in specific areas, and ability to ensure alignment with headquarters’ strategies while transferring knowledge to local teams. d. HRM Issues for Expatriates: Key HRM issues include selection processes, training and support during relocation, managing repatriation, and addressing challenges like culture shock and family adjustment. e. HRM Issues for Host-Country Employees: Companies must address local labor laws, cultural integration, career development opportunities, and ensuring equitable treatment in comparison to expatriates to foster a motivated and productive workforce. OTHER RESOURCES I. Websites http://www.hr.dla.mil. Organized by Defense Logistics Agency (DLA) Resources. See heading of Overseas. The organization teaches about preparation, living and working there, and returning home. II. Books Cultural Shock: Successful Living Abroad: A Wife’s Guide, R. Pascoe, Graphic Arts Center Publishing Company, 1993. The Expert Expatriate, M. Brayer & P. Linderman, Nicholas Brealey Publishing, 2002. Survival Kit for Overseas Living, L. Kohls, Nicholas Brealey Publishing, 2001. III. Articles “HR Helps Make the Call on Overseas Centers,” HR Magazine, July 2003, Vol. 48, No. 7. The article provides help on locating overseas call centers. Solution Manual for Human Resource Management: A Managerial Tool for Competitive Advantage Lawrence S. Kleiman 9781426649189