Human Resource (Responsibilities of HRM (8. Separation &…
- Training: Cultural training, language training, practical training - all of these can help in adjustment
- Language: Important to get local language training to build rapport with local staff
- Re-integration to home country organisation (upon repatriation)
Selection issues for overseas assignments:
- Technical competence:
- Role clarity: Extent to which what is expected from the assignee is clear and unambiguous.
- Role conflict: Conflicting signals on what is expected in the new work setting.
- Personal traits/relational abilities:
The ability to deal effectively with superiors, peers, subordinates, biz associates and clients.
- Ability to live and work with people whose value systems, beliefs, customs, manners, way of conducting biz is different. (Handle culture shock)
- Ability to cope with environmental variables:
- Political, legal, socioeconomic structures in the host country.
- Family situation:
- Adaptability of the expat's spouse and children.
Challenges faced by Expats:
- 70% fail to complete assignments in developing countries. Cost of failure is high, between $0.25 million and $1 million per employee.
- Main reasons for US expats failures:
- Inability of spouse to adapt
- Manager's inability to adjust
- Other family-related issues
- Manager's personal/emotional maturity
- Inability to cope with larger overseas responsibilities.
- Expats stress: Imbalance between expectations and abilities affected by culture shock.
- Culture shock: An expat's reaction to a new, unpredictable and uncertain environment.
- Reverse culture shock: (when they return to their home country)
- Career anxiety
- Work adjustment
- Loss of status and pay, esp. perks e.g. chauffeured cars
- Controllers: Represent interest of HQ
- Managers: Run daily operations and build local capabilities.
- Ambassadors: Build relationship with host country stakeholders. Also represent the interest of the subsidiaries when interacting with the HQ.
- Trainer: Train their host country national replacements.
- Non-native employees working in a foreign country.
- Used by MNEs to implement management practices in subsidiaries the same way operations are in the home country.
Challenges faced by/managing expatriates:
- Selection of expats and culture shock in foreign country.
- Failure of family to adopt to foreign country
- Who should assess performance of the expats
- How to prepare expats for life in foreign country and re-entry into their home country.
- How much should an expat be paid or compensated?
High Power Distance (China):
Low Power Distance (US):
- Hierarchical, superior gives direction
- Subordinate avoids pointing our problems to superior, they do not want to share responsibilities of decision making.
- Flat, decentralised decision making.
- Subordinates expects to participate in decision-making.
- High power distance:
Important to negotiate with decision maker at the appropriate level. Otherwise it may take longer than expected as it needs to move through many layers of bureaucracy.
- Low power distance:
May end up taking a long time to make decisions as everyone expects to be consulted.
In times of urgency, high power distance leaders are more decisive and make faster decisions.
Responsibilities of HRM
8. Separation & Exit
- Employees leave the organisation
E.g. Resignation, retirement, ill-health/death, redundancy (retrenchment)
6. Performance Appraisal
- Managers give subordinates feedback on their performance
- Purpose: Maintain motivation and high performance.
- Measurement of performance: Simple rating scales / Management by objectives
- Compensation (salary)
- Benefits (e.g. leaves, dental, etc)
Purpose: Motivate employees
- Introduce new employees to organisation
- Inform them of job duties
- Responsibilities and policies
- Values and cultures of the organisation
3. Selecting Staff
Use of various means to select the right person for the job
- Curriculum Vitae/Resume
- References from past employers
- Job applications (personal letter/form)
- Testing (e.g. cognitive ability, quantitative skills, etc.)
- Assessment centres (e.g. personality tests, simulations, role-plays)
Look for the right talent inside/outside of the firm
- Internal: Promote/transfer people
- External: Recruit people through education institutions, newspaper advertisements, headhunters
- Forecast number, type of employees, skills and expertise required
- Accounts for employment law
E.g. Equal opportunity laws, work permit
Process of selecting, training, developing, and compensating personnel in overseas position.
- Managing people in a company as a resource.
- About finding the right people, and motivate them to achieve org. goals and org. effectiveness.
Labour Relations Issues
Local Labour Force
Can limit choices available to international companies
E.g. US motor giant, GM, at one stage was unable to consolidate its operations in the most efficient manner because labour unions objected to proposed changes
- MNE threatening to move productions to another country
(E.g. Ford, at one stage, threatened to move production to elsewhere in Europe when the British workers were particularly active in expressing their dissatisfaction)
- MNEs only bring low-skilled tasks to foreign operations. (This makes it easy for companies to shift production to another country)
- MNEs impose unfamiliar labour practices from other countries.
(E.g. Japanese auto plants in USA are not unionised.)
MNEs must take note of country differences in labour practices:
- Germany: Labour unions are traditionally strong
Unions set the pay scale for around 90% of the country's workers, with wages determined by job classifications.
- Some Northern European Countries: Traditions of industrial democracy - legally mandated rights for employees to participate in significant management decisions.
E.g. Work councils - groups that consist of both workers and managers representatives that are in charged with dealing with matters such as improving company performance, working conditions and job security.
- Japan: Union-management relationship are cooperative. Social custom dictates non-confrontational behaviour.
1. Going-rate approach:
E.g. Lenovo: When they send Chinese expats to New York, USA, expats are paid the going rate for comparable positions in New York.
- Pay expats the local rate for comparable positions in a host country
- Going rate differs from country to country.
- Simple to use
- Attractive for expats when going rate is higher in host country.
- Not attractive when going rate in host country is lower
- Difficult for repatriating expats back home from a country with a higher going rate.
E.g. China expat in USA repatriated back home.
2. Balance sheet approach:
Problem of balance sheet approach:
- Pay expats to equalise the purchasing power across countries and maintain same standard of living.
- Financial incentives given for accepting the foreign assignment.
- Purpose: Protect the manager's spending pattern in the home country
- Company also picks up additional cost of tax, housing, goods and services.
- Costly, complex to administer
- Creates big disparity between expats managers and local peers in the host country
- Equity for expats between home and foreign assignment
- Approach facilitates repatriation.
- Costly, complex to administer
- Create big disparity between expats and local peers in the host country.
New trend: Develop a cadre of internationally mobile executives, phase out special premiums and incentives payments. Deal with only cost-of-living issues when designing international pay packages.
Elements in Compensation packages:
1. Base salary:
- Generally set in a similar range as base salaries for similar positions in home country.
- For taking on foreign assignment (range from 10-30%)
- Hardship,housing, cost-of-living, and education allowances
- So that expats don't have to pay taxes in both countries. Companies usually pay host country taxes if the countries involved do not have a reciprocal tax treaty.
- Expats would get similar medical and pension benefits as they would get if they worked at home.