PART FIVE EMPLOYEE RELATIONS C H A P T E R S e v e n t e e n Managing Global Human Resources 17 Lecture Outline Strategic Overview HR and the Internationalization of Business The Global Challenges How Inter-country Differences Affect HRM Global Differences and Similarities in HR Practices Personnel Selection Procedures The Purpose of the Performance Appraisal Training and Development Practices The Use of Pay Incentives How to Implement a Global HR System Making the Global HR System More Acceptable Developing a More Effective Global HR System Implementing the Global HR System Staffing the Global Organization International Staffing: Home or Local? Offshoring Management Values and International Staffing Policy Why Expatriate Assignments Fail Selecting Expatriate Managers Training and Maintaining Expatriate Employees Orienting and Training Employees on International Assignment Compensating Expatriates Appraising Expatriate Managers International Labor Relations Terrorism, Safety and Global HR Repatriation: Problems and Solutions APPENDIX for CHAPTER 17 HRCI Appendix In Brief: This chapter outlines some of the HR problems and issues involved with international businesses. The subjects covered include inter-country differences, using selection to improve international assignments, and training and maintaining international employees. Interesting Issues: Many companies desire to rotate managers through international assignments, but find that work visa requirements of the host countries (including the U.S.) can sometimes greatly hinder these efforts. Federal anti-terrorism laws also make moving employees across borders more challenging. ANNOTATED OUTLINE I. HR and the Internationalization of Business International Business and Its Impact on Managing – Due to the European Market unification, the introduction of the Euro currency, the opening of Eastern Europe, and the rapid development of demand in Asia and other areas of the world, large and small firms are finding their success depends on their ability to market and manage overseas. A. The Global Challenges – include deployment, knowledge and innovation dissemination, and identifying and developing talent on a global basis. Complicating these decisions are the cultural, political, legal, and economic differences among countries and their peoples. B. How Inter-country Differences Affect HRM – A company operating multiple units abroad does not have the luxury of dealing with a relatively limited set of economic, cultural, and legal variables. 1. Cultural Factors – Countries differ widely in their cultures, which are the basic values to which their citizens adhere. Cultural differences from country to country necessitate corresponding differences in management practices among a company’s subsidiaries, because local cultural norms can undermine employer’s attempts to have uniform codes of conduct 2. Economic Systems – Differences in economic systems translate into differences in HR practices. Differences in labor costs are substantial. 3. Legal and Industrial Relations Factors – vary dramatically from country to country. In many European countries, work councils replace the informal or union based worker-management mediations typical in U.S. firms. In Germany and several other countries, codetermination is the rule where employees have the legal right to a voice in setting company policies. 4. HR Abroad: The European Union (EU) – refers to the unification of separate European countries in the 1990s into a common market for goods, services, capital, and labor. EU directives are binding on all member countries, which necessitate adjustments to both EU directives and individual country laws. Variances in HR practices affect minimum EU wages, working hours and employee representation . 5. HR Abroad: China – There are relatively scarce employment services and an active union movement in China. The ownership of the firm affects how these issues need to be handled. Sporadic labor shortages are fairly widespread. Employees tend to gravitate toward employers that can provide the best career advancement training and opportunities. Employees are primarily selected on the basis of their resume and an interview. The need to save face and avoid confrontation can make employee appraisal very sensitive. Compensation issues also exist. ➢ NOTES Educational Materials to Use II. Global Differences and Similarities in HR Practices A. Personnel Selection Procedures – Employers around the world tend to use similar criteria and methods for selecting employees. As in the United States, employers around the world usually rank “personal interviews,” “the person’s ability to perform the technical requirements of the job,” and “proven work experiences in a similar job” at or near the top of the criteria or methods they use. B. The Purpose of the Performance Appraisal – There tends to be more variation in how employers in different countries use the results of performance appraisals. To recognize subordinate” was a main purpose for appraisals in Japan and Mexico. C. Training and Development Practices – there are usually more similarities than differences across countries. In particular, employers just about everywhere rank “to improve technical abilities” as the main purpose for providing employees with training. The amount of training firms provide does vary substantially from country to country. When You’re on Your Own, HR for Line Managers and Entrepreneurs: Comparing Small Businesses, HR Practices in the United States and China – Researchers have identified many differences between HR for small businesses in China from those in the United States. Differences are significant in the areas of: job analysis, performance appraisal practices, and actual pay practices. D. The Use of Pay Incentives – there are great variations in the use of incentive pay. Some communist countries actually use more incentive pay than the U.S. ➢ NOTES Educational Materials to Use III. How To Implement a Global HR System A. Making the Global HR System More Acceptable 1. Remember global systems are more accepted in truly global organizations. 2. Investigate pressures to differentiate and determine their legitimacy. 3. Try to work within the context of a strong corporate culture. B. Developing a More Effective Global HR System 1. Form global HR networks. 2. Remember that it’s more important to standardize ends and competencies than specific methods. C. Implementing the Global HR System 1. Remember, “You can’t communicate enough.” 2. Dedicate adequate resources for the global HR effort. ➢ NOTES Educational Materials to Use IV. Staffing the Global Organization A. International Staffing: Home or Local? – Multinational companies (MNCs) employ several types of international managers. Locals are citizens of the countries where they are working. Expatriates (“expats”) are non-citizens of the countries in which they are working. Home-country nationals are citizens of the country in which the multinational company has its headquarters. Third-country nationals are citizens of a country other than the parent or the host country. More flexible expatriate assignments involving no formal relocation, are becoming more popular, and are aided by technological advances. B. Offshoring – having local employees abroad do jobs that the firm’s domestic employees previously did in-house—is growing by leaps and bounds. Offshoring jobs is very controversial. In the 1980s and 1990s, it was mostly manufacturing jobs that employers shipped overseas. C. Management Values and International Staffing Policy – Ethnocentric-run firms would staff foreign subsidiaries with parent-country nationals because they believe that home country attitudes, management styles, and knowledge are superior to the host country. Polycentric-run firms would staff foreign subsidiaries with host- country nationals because they are the only ones that can really understand the culture and the behavior of the host country market. Geocentric-run firms would staff foreign subsidiaries with the best people for key jobs regardless of nationality because they believe that the best manager for any specific position anywhere on the globe may be in any of the countries in which the firm operates. D. Why Expatriate Assignments Fail – International assignments fail for various reasons including: personality, the person’s intentions, and non-work factors. Family pressures are frequent. Three things help the adjustment: language fluency, having preschool age children rather than school-age or no children, and a strong bond between spouse and ex-pat partner. E. Selecting Expatriate Managers – is similar to selecting domestic managers, but firms need to determine whether managers for international assignments can cope internationally. 1. Adaptability screening, often conducted by a psychologist or psychiatrist, is aimed at assessing the assignee’s and family’s probable success in handling the foreign transfer. The New Workforce: Sending Women Managers Abroad – Many managers assume that women don’t want to work abroad. In fact, this survey found, women do want international assignments. Employers tend to assume that women posted abroad are more likely to become crime victims. However, most of the surveyed women expats said that safety was no more an issue with women than it was with men. Fear of cultural prejudices against women is another common issue. Here, there’s no doubt that in some cultures women have to follow different rules than do their male counterparts. But even here, as one expat said, “Even in the more harsh cultures, once they recognize that the women can do the job, once your competence has been demonstrated, it becomes less of a problem.” ➢ NOTES Educational Materials to Use V. Training and Maintaining Expatriate Employees A. Orienting and Training Employees on International Assignment – Some claim there is generally little or no systematic selection and training for assignments overseas. A four-step approach is recommended: 1) focus on the impact of cultural differences, and on raising trainees’ awareness of such differences and their impact on business outcomes; 2) get participants to understand how attitudes (positive and negative) are formed and how they influence behavior; 3) provide factual knowledge about the target country; and 4) provide skill building in areas like language, adjustment and adaptation skills. 1. Trends in Expatriate Training – more firms are providing continuing, in-country cross-cultural training during the early stages of a person’s overseas assignment; employers are returning managers as resources to cultivate the “global mindsets” of the rest of their home office staff; there is increased use of software and the Internet for cross-cultural training. B. Compensating Expatriates – presents some tricky problems due to the question of whether or not to maintain companywide pay scales and policies 1. The Balance Sheet Approach - This common approach to expatriate pay, refers to equalizing purchasing power across countries. 2. Incentives – Many firms offer overseas managers long-term incentives that are tied more closely to performance at the foreign subsidiary level. When You’re on Your Own – Establishing a Global Pay System There are five phases in a successful program: defining the global philosophy framework, systematizing the job structure framework, formulating the rewards framework, instituting the talent management framework, and ongoing program assessment. C. Appraising Expatriate Managers – can be improved by: 1. Stipulating the assignment’s difficulty level; 2. Weighing the evaluation more toward the on-site manager’s appraisal than toward the home-site manager’s distant perceptions of the employee’s performance. 3. Modifying the normal performance criteria used for that particular position to fit the overseas position. These differences can be in many different areas. D. International Labor Relations – While union membership may be dropping in the US, it is still relatively high abroad. European unions are influential. Know Your Employment Law: The Equal Employment Opportunity Responsibilities of Multinational Employers – U.S. employers doing business abroad, or foreign firms doing business in the United States or its territories, have wide-ranging responsibilities to their employees under American equal employment opportunity laws, including Title VII, the ADEA, and the ADA. E. Terrorism, Safety, and Global HR – New federal anti-terrorism laws are affecting an employer’s ability to import and export workers. 1. Taking Protective Measures – Many firms retain crisis management team services. Firms face resistance from employees who are reluctant to accept foreign assignments. Kidnappings have been on the rise. 2. Kidnapping and Ransom (K&R) Insurance – The insurance itself typically covers several costs associated with kidnappings, abductions, or extortion attempts. These costs might include, for instance, hiring a crisis team, the actual cost of the ransom payment to the kidnappers or extortionists, ensuring the ransom money in case it’s lost in transit, legal expenses, and employee death or dismemberment. E. Repatriation: Problems and Solutions – Some common repatriation problems are: they often fear that out of sight is out of mind; returning expatriates are assigned to mediocre or makeshift jobs; returnees are taken aback when the trappings of the overseas job are lost upon return; the expatriate’s former colleagues have been promoted while he/she was gone; and the expatriate’s family may go through culture shock. Some possible solutions are: written repatriation agreements; assign a sponsor; provide career counseling; keep communications open; and develop reorientation programs. Improving Productivity Through HRIS: Taking the HRIS Global – As a company grows relying on manual HR systems to manage activities like worldwide safety, benefits administration, payroll, and succession planning becomes unwieldy. For global firms, it makes particular sense to expand the firm’s human resource information systems abroad. ➢ NOTES Educational Materials to Use Appendix to Chapter 17 HRCI Appendix – This section deals with the Human Resource Certification Institute’s certification examinations for the Professional in Human Resources (PHR) and Senior Professional in Human Resources (SPHR) designations. The knowledge base for the exam is disussed and relative percentages of content areas are estimated. DISCUSSION QUESTIONS 1. You are the president of a small business. What are some of the ways you expect being involved internationally will affect your business? Being involved internationally can affect virtually every aspect of your business. It can affect the growth of your business due to additional markets, it can affect costs of doing business, and it can affect every aspect of HRM as outlined in the chapter 2. What are some of the specific uniquely international activities an international HR manager typically engages in? 1) Formulating and implementing HR policies and activities in the home-office of a multinational company. This HRM manager would engage in selecting, training, and transferring parent-company personnel abroad and formulating HR policies for the firm as a whole and for its foreign operations. 2) Conducting HR activities in the foreign subsidiary of an MNC is another form. Again, local HR practices are often based on the parent firm's HR policies, fine-tuned for local country practices. 3. What inter-country differences affect HRM? Give several examples of how each may specifically affect HRM. 1) Cultural Factors - U.S. managers may be most concerned with getting the job done. Chinese managers may be most concerned with maintaining a harmonious environment. And Hispanic managers may be more concerned with establishing trusting, friendship relationships. 2) Economic Factors - U.S. economic systems tend to favor policies that value productivity while more socialistic countries like Sweden would favor policies that prevent unemployment. 3) Labor Cost Factors - Mexican labor costs (low) can allow inefficiencies of labor, while German labor costs (high) might require a focus on efficiency. 4) Industrial Relations Factors - German law requires that workers have a vote in setting policies while in Japan the employees do not have a say, but the government may have a say in establishing policies. 5) The European Community - The EC will gradually reduce the differences between member countries. 4. You are the HR manager of a firm that is about to send its first employees overseas to staff a new subsidiary. Your boss, the president, asks you why such assignments fail, and what you plan to do to avoid such failures. How do you respond? Estimates say that 20% to 25% of all overseas assignments fail. Reasons include: inability of spouse to adjust, managers' inability to adjust, other family problems, and managers' inability to cope with responsibility. We will need to select a manager that displays: adaptability and flexibility, cultural toughness, self-orientation, others- orientation, perceptual ability, and has a family with adaptability. 5. What special training do overseas candidates need? In what ways is such training similar to and different from traditional diversity training? It is suggested that a four-step training approach be taken: 1) training focused on the impact of cultural differences and their impact on business outcomes; 2) training focused on attitudes that are aims at getting participants to understand how attitudes (both positive and negative) are formed and how the influence behavior; 3) training focused on factual knowledge about the target country; and 4) skill building in areas like language and adjustment and adaptation skills. This training is different from traditional diversity training in the last two steps, which are not normally part of diversity training. In addition, traditional training and development is needed as with any other manager. 6. How does appraising an expatriate's performance differ from appraising that of a home-office manager? How would you avoid some of the unique problems of appraising the expatriate's performance? A major difficulty is: Who actually appraises the performance? (Cultural differences could affect it) There are five suggestions: 1) Stipulate the assignment's difficulty level; 2) Weight the evaluation towards the on-site manager's appraisal; 3) Have a former expatriate advise the home-site manager in his or her evaluation; 4) Modify the normal performance criteria to fit the position and characteristics of the locale; 5) Attempt to give credit for insights, not just measurable criteria. 7. As an HR manager, what program would you establish to reduce repatriation problems of returning expatriates? The programs listed in the chapter give a good summarization of the types of programs and activities that should be established to assure a smooth repatriation. Establish a repatriation program that includes pre-return training, cultural reintegration workshops, and career counseling. Additionally, providing a clear post-return support system and mentoring can help ease the transition and address any professional challenges. DESSLER COMPANION WEB SITE We invite you to visit the Dessler homepage (http://www.prenhall.com/dessler) on the Prentice Hall Web site for the best online business support available. This site provides professors with a customized course Web site, including new communication tools, one-click navigation of chapter content, and great resources, such as Internet Resources, an HRCI Exam Prep Guide, assessment exercises, and more. INDIVIDUAL AND GROUP ACTIVITIES 1. Working individually or in groups, write an expatriation and repatriation plan for your professor, who your school is sending to Bulgaria to teach HR for the next three years. In developing their expatriation and repatriation plan, the students should use Internet resources to find information on various cultural, economic, and legal factors that could affect their professor. They should include a description of the type of training program their professor should take prior to leaving for Bulgaria, the pay structure while on the international assignment, and particulars for how the repatriation plan will work for the professor’s return. 2. Give three specific examples of multinational corporations in your area. Check the library or Internet or with each firm to determine in what countries these firms have operations and explain the nature of some of their operations, and whatever you can find out about their international HR policies. The examples will vary according to what companies have operations in your area. This can be an exciting opportunity for students to find out more about companies and what they are doing beyond your immediate geographic area. 3. Choose three traits useful for selecting international assignees, and create a straightforward test (not pencil and paper) to screen candidates for these traits. There are an infinite number of responses that you might get to this question. First, make sure that the traits either are on the list in the chapter, or are reasonable and logical traits that would be useful. Second, assure that the tests that the students develop are ones that will actually identify the presence of these traits. 4. Use a library source to determine the relative cost of living in five countries as of this year, and explain the implications of such differences for drafting a pay plan for managers being sent to each country. The most common approach is to equalize purchasing power across countries, a technique known as the balance sheet approach. The basic idea is that each expatriate should enjoy the same standard of living he or she would have had at home. 5. The HRCI “Test Specifications” appendix at the end of this book lists the knowledge someone studying for the HRCI certification exam needs to have in each area of human resource management (such as in Strategic Management, Workforce Planning, and Human Resource Development). In groups of four to five students, do four things: (1) review that appendix now; (2) identify the material in this chapter that relates to the required knowledge the appendix lists; (3) write four multiple choice exam questions on this material that you believe would be suitable for inclusion in the HRCI exam; and (4) if time permits, have someone from your team post your team’s questions in front of the class, so the students in other teams can take each others’ exam questions. The material from this chapter that is applicable to the HRCI certification exam would include: The HR challenges of international business, how inter-country differences affect HRM, global differences and similarities in HR practice, how to implement a global HR system, staffing the global organization, and training and maintaining expatriate employees. 6. The April 2004 issue of HR Magazine contained an article titled “Aftershocks of War,” which said that soldiers returning to their jobs from Iraq would likely require HR’s assistance in coping with “delayed emotional trauma.” The term delayed emotional trauma refers to the personality changes such as anger, anxiety, or irritability and associated problems such as tardiness or absenteeism that exposure to the traumatic events of war sometimes triggers in returning veterans. Assume you are the HR manager for the employer of John Smith, who is returning to work next week after one year in Iraq. Based on what you read in this chapter, what steps would you take to help ensure that John’s reintegration into your workforce goes as smoothly as possible? There are several suggestions in the section “Repatriation: Problems and Solutions.” At minimum, you should arrange for a sponsor/mentor, career counseling, and a reorientation program. You need to also make sure that there are clear and open doors for him to communicate with you. It would be a good idea to have some counseling available as well. Experiential Exercise: Compensation Incentives for Expatriate Employees This exercise forces students to think realistically about the compensation problems with expatriate employees. The rankings will vary, but students should be prepared to defend their rankings with reason and logic. Similarly, while the described “effects on compensation” may vary, they should be reasonable and logical. When discussing the problems that the higher level of compensation might create, do not forget: 1) jealousy of other employees, 2) problems of adjustment when repatriation occurs, and 3) whether even this level will be adequate to entice employees to take the foreign assignments. Application Case Incident: “Boss, I Think We Have a Problem” 1. Based on the chapter and case incident, compile a list of 10 international HR mistakes Mr. Fisher has made so far. Among his mistakes: Fisher has not properly identified candidates; cultural sensitivity, interpersonal skills and flexibility have not been included as required job skills; there is no system in place to assess candidates for proper skills; the company does not have realistic cost projects for cross-border operations; the company has not determined whether it would be cost effect to have an expatriate manager; there are no assignment letters documenting the scope of the job; there is no international compensation system in place; the company has not taken into account differences in foreign expenses; the company has not taken into account foreign taxes; there is no formal relocation assistance program in place; the company has not considered the importance of family support; there is no cultural orientation program in place for expatriate mangers or their family members; among others. 2. How would you have gone about hiring a European sales manager? Why? I would have investigated the market to determine the appropriate level of compensation and benefits. Expatriate compensation packages should consider tax equalization clauses or other measures for dealing with differing costs of living. The company should also have retained counsel on European labor laws/ practices. The location of the office should be carefully selected for favorable labor and tax laws. Like Fisher, I would have wanted a large pool of potential applicants, but given Fisher’s inexperience, he may have benefited from the use of an outside agency (search firm). Finally, Fisher’s stereotypes of European managers may have clouded his judgment with his existing pool of applicants. 3. What would you do now if you were Mr. Fisher? Fisher needs to seek legal counsel in regard to his labor situation. He is likely in the wrong. In which case, he will need to reinstate the employees and apologize. He will in all likelihood need to start over and find an appropriate sales manager with knowledge of the local culture and business practices. EXPERIENTIAL EXERCISES & CASES Continuing Case: Carter Cleaning Company Going Abroad 1. Assuming they began by opening just one or two stores in Mexico, what do you see as the main HR-related challenges he and Jennifer would have to address? The students will not only need to incorporate their learnings from this chapter to answer this question, they should also include information from all the chapters in the text to come up of the main HR-related implications and challenges Carter Cleaning Company will face as a result of opening the Mexican stores. 2. How would you go about choosing a manager for a new Mexican store if you were Jack or Jennifer? For instance, would you hire someone locally or send someone from one of your existing stores? Why? The students should used the information in the chapter on selecting international managers. The students are likely to differ in their choices as to which type of international manager they would suggest for the London operation; just look for them to justify their responses. 3. The cost of living in Mexico is substantially below that of where Carter is now located: How would you go about developing a pay plan for your new manager if you decided to send an expatriate to Mexico? The students should use information from chapters 11, 12, and 13, and the Internet sources presented in those chapters to formulate their response to this question. 4. Present a detailed explanation of the factors you would look for in your candidate for expatriate manager to run the stores in Mexico. The students should include information presented in chapters one through fifteen, in addition to the information presented in this chapter, to develop their list of HR- related things Carter Cleaning Company needs to do in selecting their expatriate employee for Mexico. Translating Strategy into HR Policies and practices case: The Hotel Paris Managing Global Human Resources – In this case Lisa Cruz, the HR manager has turned her attention to developing the HR policies her company needs to be able to more effectively do business internationally. 1. Provide a one page summary of what individual hotel managers should know in order to make it more likely incoming employees from abroad, like those in the Hotel Paris’ management development program, will adapt to their new surroundings. Hotel managers need to know all the issues facing ex-pats, and be prepared to assess the job fit and other items required to make a foreign assignment successful. Figure 17-1 will be helpful in developing answers. 2. In previous chapters you recommended various human resource practices Hotel Paris should use. Choose one of these, and explain why you believe they could take this program abroad, and how you suggest they do so. Answers will vary widely. Instructors should look for solid, text-based justification of answers given. 3. Choose one Hotel Paris human resources practice that you believe is essential to the company achieving its high-quality-service goal, and explain how you would implement that practice in the firm’s various hotels worldwide. Answers will vary widely. Instructors should look for solid, text-based justification of answers given. KEY TERMS codetermination Employees have the legal right to a voice in setting company policies. expatriates (expats) Non-citizens of the countries in which they are working. home country nationals Citizens of the country in which the multinational company has its headquarters. third country nationals Citizens of a country other than the parent or the host country. offshoring Having local employees abroad do jobs that the firm’s domestic employees previously did in-house. ethnocentric The notion that home-country attitudes, management style, knowledge, evaluation criteria, and managers are superior to anything the host country has to offer. polycentric A conscious belief that only the host-country managers can ever really understand the culture and behavior of the host-country market. geocentric The belief that the firm’s whole management staff must be scoured on a global basis, on the assumption that the best manager of a specific position anywhere may be in any of the countries in which the firm operates. adaptability screening A process that aims to assess the assignee’s (and spouse’s) probable success in handling a foreign transfer. foreign service premiums Financial payments over and above regular base pay, typically ranging between 10% and 30% of base pay. hardship allowances Compensate expatriates for exceptionally hard living and working conditions at certain locations. mobility premiums Typically, lump-sum payments to reward employees for moving from one assignment to another. VIDEO CASE APPENDIX Video 9: Global Business and Ethics This video suggests, among other things, that there is no absolute statement on what constitutes ethical behavior. Instead, ethics tends to be determined by social, cultural, and other value-laden factors, such as religion. Similarly, as the video points out, the degree of enforcement (for instance, regarding ethical lapses like bribery of customers) tends to vary with social, cultural, and other factors, so what is considered ethical or unethical in one society might not be in another. This video also discusses the interplay between ethics and management practices. For example, the video points out that “most people look first at how a company treats its employees when viewing its ethics.” Focus primarily on the introductory material in the video, the part on ethics and management practices. Video 10: Labor Relations In this video, Sarah has just accepted a position in HotJobs’ computer programming department as a full-time programmer. She has come to the HR department a bit nervously, to ask whether she has the option of joining the union there. As Sarah says, “I had a lot of benefits with my previous job and there was a union there.” HotJobs does not offer union membership. The human resource representative goes on to explain that HotJobs is committed to its employees, and grievances are dealt with on a case-by-case basis. Therefore there is no need for a third party to intercede between the union and the employee, she says. This video also explains the importance of union membership in specific industries and the benefits that union membership provides to employees. Video 11: Stress As Chapter 16 explains, stress is an ever-present and potentially debilitating factor at work. In this video, the sources of stress include the employees’ own dedication and sense of responsibility, changes in job scope and workload that resulted from the company’s rapid growth, and the pressure to make the company a success. At Student Advantage, the stressors appear to be counterbalanced somewhat by most employees’ feeling that it’s fun to work at the company, and that the atmosphere is collegial and the challenges are worthwhile. The fun and psychic rewards notwithstanding, it’s apparent from the video that stress at this company is a fact of life. For example,Vinny mentions that one source of stress is when someone comes to him and says something needs to be done “an hour ago.” Another source of stress here is that employees have to do a sort of balancing act, balancing the needs of their workplace and job with outside interests and family. Sympathy from co-workers helps, but employers still need to be able to refresh themselves and keep stress at tolerable levels. For full video case and discussion questions, please visit the Faculty Resource section of the Dessler Companion Web Site at: http://www.prenhall.com/dessler PowerPoint Presentation by Charlie Cook The University of West Alabama 1 Human Resource Management ELEVENTH EDITION G A R Y D E S S L E R Managing Global Human Resources Chapter 17 Part 5 | Employee Relations 17–2 After studying this chapter, you should be able to: 1. List the HR challenges of international business. 2. Illustrate how intercountry differences affect HRM. 3. Discuss the global differences and similarities in HR practices. 4. Explain five ways to improve international assignments through selection. 5. Discuss how to train and maintain international employees. 17–3 HR and the Internationalization of Business • The Global Challenges ➢Coordinating market, product, and production plans on a worldwide basis. ➢Creating organization structures capable of balancing centralized home-office control with adequate local autonomy. ➢Extending HR policies and systems to service staffing needs abroad. 17–4 Challenges of International HRM • Deployment ➢Easily getting the right skills to where they are needed, regardless of geographic location. • Knowledge and Innovation Dissemination ➢Spreading state-of-the-art knowledge and practices throughout the organization regardless of their origin. • Identifying and Developing Talent on a Global Basis ➢Identifying those who can function effectively in a global organization and developing their abilities. 17–5 Intercountry Differences Affecting HRM International Human Resource Management Cultural Factors Legal and Industrial Relations Factors Economic Systems 17–6 Global Differences and Similarities in HR Practices International Human Resource Management Training and Development Practices Use of Pay Incentives Purpose of Performance Appraisal Personnel Selection Procedure 17–7 How to Implement a Global HR System • Best practices for making a global HR system more acceptable to local managers: 1. Remembering that global systems are more accepted in truly global organizations. 2. Investigating pressures to differentiate and determine their legitimacy. 3. Working within the context of a strong corporate culture is best. 17–8 A Global HR System (cont’d) • Best practices for developing a more effective global HR system: ➢Form global HR networks that make local HR managers a part of global teams. ➢Remember that it’s more important to standardize ends and competencies than specific methods. • Best practices for implementing the global HR system: ➢Remember, “You can’t communicate enough.” ➢Dedicate adequate resources for the global HR effort. 17–9 TABLE 17–1 Summary of Best Global HR Practices • Work within existing local systems—integrate global tools into local systems • Create a strong corporate culture • Create a global network for system development— global input is critical • Treat local people as equal partners in system development • Assess common elements across geographies • Focus on what to measure and allow flexibility in how to measure • Allow for local additions beyond core elements • Differentiate when necessary • Train local people to make good decisions about which tools to use and how to do so • Communicate, communicate, communicate! • Dedicate resources for global HR efforts • Know, or have access to someone who knows, the legal requirements in each country Source: Ann Marie Ryan et al., “Designing and Implementing Global Staffing Systems: Part 2—Best Practices,” Human Resource Management 42, no. 1 (Spring 2003), p. 93. Do . . . • Try to do everything the same way everywhere • Yield to every claim that “we’re different”— make them prove it • Force a global system on local people • Use local people just for implementation • Use the same tools globally, unless you can show that they really work and are culturally appropriate • Ignore cultural differences • Let technology drive your system design—you can’t assume every location has the same level of technology investment and access • Assume that “if we build it they will come”—you need to market your tools or system and put change management strategies in place Don’t . . . 17–10 Staffing the Global Organization • International staffing: Home or local? ➢Expatriates (expats) ➢Home-country nationals ➢Third-country nationals • Offshoring ➢Having local employees abroad do jobs that the firm’s domestic employees previously did in-house • Offshoring Issues ➢Effective local supervisory/management structure ➢Screening and required training for locals ➢Local compensation policies and working conditions 17–11 Staffing the Global Organization (cont’d) Ethnocentric Polycentric Geocentric International Staffing Policy Top Management Values 17–12 Staffing the Global Organization (cont’d) Inability of Spouse to Adjust Inability to Cope with Overseas Responsibilities Lack of Cultural Skills Why Expatriate Assignments Fail Personality Personal Intentions Family Pressures 17–13 Staffing the Global Organization (cont’d) Realistic Previews Careful Screening Cultural and Language Training Improved Benefits Packages Improved Orientation Helping Expatriate Assignments Succeed 17–14 FIGURE 17–1 Five Factors Important in International Assignee Success, and Their Components I. Job Knowledge and Motivation Managerial ability Organizational ability Imagination Creativity Administrative skills Alertness Responsibility Industriousness Initiative and energy High motivation Frankness Belief in mission and job Perseverance II. Relational Skills Respect Courtesy and fact Display of respect Kindness Empathy Nonjudgmentalness Integrity Confidence III. Flexibility/Adaptability Resourcefulness Ability to deal with stress Flexibility Emotional stability Willingness to change Tolerance for ambiguity Adaptability Independence Dependability Political sensitivity Positive self-image IV. Extracultural Openness Variety of outside interests Interest in foreign cultures Openness Knowledge of local language(s) Outgoingness and extroversion Overseas experience V. Family Situation Adaptability of spouse and family Spouse’s positive opinion Willingness of spouse to live abroad Stable marriage Source: Adapted from Arthur Winfred Jr., and Winston Bennett Jr., “The International Assignee: The Relative Importance of Factors Perceived to Contribute to Success,” Personnel Psychology 18 (1995), pp. 106–107. 17–15 Selecting Expatriate Managers • Adaptability Screening ➢Assessing the assignee’s (and spouse’s) probable success in handling the foreign transfer. ➢Overseas Assignment Inventory ❖ A test that identifies the characteristics and attitudes international assignment candidates should have. • Realistic Previews ➢The problems to expect in the new job, as well as the cultural benefits, problems, and idiosyncrasies of the country. 17–16 Orienting and Training Employees on International Assignment • There is little or no systematic selection and training for assignments overseas. • Training is needed on: ➢The impact of cultural differences on business outcomes. ➢How attitudes (both negative and positive) are formed and how they influence behavior. ➢Factual knowledge about the target country. ➢Language and adjustment and adaptation skills. 17–17 Trends in Expatriate Training • Rotating assignments that permit overseas managers to grow professionally. • Management development centers around the world where executives hone their skills. • Classroom programs provide overseas executives with educational opportunities similar to stateside programs. • Continuing, in-country cross-cultural training. • Use of returning managers as resources to cultivate the “global mind-sets” of their home-office staff. • Use of software and the Internet for cross-cultural training. 17–18 Compensating Expatriates • The “Balance Sheet Approach” ➢Home-country groups of expenses—income taxes, housing, goods and services, and discretionary expenses—are the focus of attention. ➢The employer estimates what each of these four expenses is in the expatriate’s home country, and what each will be in the host country. ➢The employer then pays any differences such as additional income taxes or housing expenses. 17–19 TABLE 17–2 The Balance Sheet Approach (Assumes Base Salary of $80,000) Annual Expense Chicago, U.S. Brussels, Belgium (U.S.$ Equivalent) Allowance Housing & utilities $35,000 $67,600 $32,600 Goods & services 6,000 9,500 3,500 Taxes 22,400 56,000 33,600 Discretionary income 10,000 10,000 0 Total $73,400 $143,100 $69,700 Source: Joseph Martocchio, Strategic Compensation: A Human Resource Management Approach, 2nd edition (Upper Saddle River, NJ: Prentice Hall, 2001), Table 12-15, p. 294. 17–20 Incentives for International Assignments • Foreign Service Premiums ➢Financial payments over and above regular base pay, and typically range between 10% and 30% of base pay. • Hardship Allowances ➢Payments to compensate expatriates for exceptionally hard living and working conditions at certain foreign locations. • Mobility Premiums ➢Lump-sum payments to reward employees for moving from one assignment to another. 17–21 Appraising Expatriate Managers • Challenges ➢Determining who should appraise the manager. ➢Deciding on which factors to base the appraisal. • Improving the Expatriate Appraisal Process ➢Stipulate the assignment’s difficulty level, and adapt the performance criteria to the situation. ➢Weigh evaluation more toward the on-site manager’s appraisal than toward the home-site manager’s. ➢If the home-office manager does the actual written appraisal, use a former expatriate from the same overseas location for advice. 17–22 International Labor Relations Industry-Wide Centralization Content and Scope of Bargaining Employer Organization Multiple Union Recognition Characteristics of European Labor Relations 17–23 Terrorism, Safety, and Global HR • Taking Protective Measures ➢Crisis management teams • Kidnapping and Ransom (K&R) Insurance ➢Crisis situations ❖ Kidnapping: the employee is a hostage until the employer pays a ransom. ❖ Extortion: threatening bodily harm. ❖ Detention: holding an employee without any ransom demand. ❖ Threats to property or products unless the employer makes a payment. 17–24 Repatriation: Problems and Solutions • Problem ➢Making sure that the expatriate and his or her family don’t feel that the company has left them adrift. • Solutions ➢Match the expat and his or her family with a psychologist trained in repatriation issues. ➢Make sure that the employee always feels “in the loop” with what’s happening back at the home office. ➢Provide formal repatriation services when the expat returns home. 17–25 K E Y T E R M S codetermination expatriates (expats) home-country nationals third-country nationals offshoring ethnocentric polycentric geocentric adaptability screening foreign service premiums hardship allowances mobility premiums Solution Manual for Human Resource Management Gary Dessler 9780133029864, 9789353942205, 9780135226803, 9780136089964, 9780134235455, 9780130141248, 9780131746176
Download
Close
Close
