CHAPTER 10: International Human Resource Management
Human Resource Management
Introduction
Human Resource Management and Functions
Human resource management (HRM)
Recruitment
Selection
Labor Relations
Training and Development
Performance Appraisal
Compensation
International Human Resource Management (IHRM)
Two added complexities compared to domestic HRM:
Must choose a mixture of international employees
Must decide the extent of adaptation to local conditions
Types of Employees
Expatriate
Home country nationals
Third country nationals
Host country nationals
Inpatriate
Flexpatriates
Expatriate
Expatriate or the Host Country Manager?
Multinationals must decide whether to use expatriates or home country nationals
Need to look at some questions
Using expatriate managers
Using host country managers
Can we recruit them from outside the company? Decisions must take into account costs of such assignments
Do parent country managers have the appropriate skills?
Do they have the expertise for the position?
High cost
Reasons for Expatriate Failure
Individual
Family
Cultural
Organizational
Personality of the manager
Spouse or family members fail to adapt
Manager fails to adapt
Excessively difficult responsibilities
Strategic Role of Expatriate Assignments
Helps managers acquire international skills
Helps coordinate and control operations dispersed activities
Communication of local needs/strategic information to headquarters
In-depth knowledge of local markets
Provide important network knowledge
Flexpatriate
The frequent flyers who travel on short notice for shorter time durations while maintaining their family and personal lives at the home-country location.
Key Functions
Manage projects
Help with transfer of technology
Consider problem areas in the foreign subsidiary
Sent to explore markets
Advantages
Do not experience many of the family and personal difficulties and stress associated with expatriate assignments.
Much less expensive than expatriate – no relocation or repatriation costs.
Disadvantages
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Taxation issues can become complicated if the assignment exceeds six months – the company may end up paying the tax.
Does not fully integrate into the local work environment and does not learn low to adapt locally.
May be resented for neglecting the host-country culture.
Repatriation Problem
Three basic cultural problems—“reverse culture shocks”
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Adapt to new work environment and culture of home
Expatriates must relearn own national and organization culture
Need to adapt to basic living environment
Strategies for Successful Repatriation
Provide a strategic purpose for the repatriation.
Provide training and preparation for the return.
Provide a home-leave policy to encourage expatriates to make regular visits to the home office.
Provide support for the expatriate and family on return.
Provide parent country information sources
Establish a team to aid the expatriate.
HRM Functions
Training and Development
Cross-cultural training
Training rigor
increases the relational abilities of future expatriates and their spouses and families
extent of effort by both trainees and trainers required to prepare the trainees for expatriate positions
Techniques and Objectives
Low rigor training
Short time period
Lectures and videos on local cultures
Briefings on company operations
High rigor training
Last over a month
Experiential learning
Extensive language training
Includes interactions with host country nationals
Performance Appraisal
Expatriate Performance Appraisal
Challenges
Fit of international operation in multinational strategy
Complex and volatile environments
Time differences and distance separation
Unreliable data
Evaluation Sources, Criteria, and Time Periods for Expatriate Performance Appraisals
Compensation
Expatriate Compensation
Local market cost of living
Taxes
Benefits
Housing
Additional Allowances and Perquisites
Foreign service premiums
Hardship allowance
Relocation allowances
Home-leave allowances
Basic HRM Functions
Headquarters-based compensation
Host-based compensation system
Global pay systems
Designing Compensation System
Design compensation systems that are attractive enough to encourage managers to take on expatriate assignments in areas critical to the multinational
Be mindful of costs associated with various compensation plans and implement the most effective and efficient programs
Strive to provide systems to ensure that expatriates have stability in terms of lifestyle and economic status
Be consistent with the overall direction and strategy of where the multinationals want to be in the future
Multinational Strategy
Multinational Strategy and EHRM
Electronic human resources (e.HR): automation of various aspects of the human resources system of a company
Strategic Benefits
of e.HR Systems
Repository of the wealth of knowledge and skills of expatriates.
Employee tracking for career management and other HR purposes.
Employees take control of their own data.
Improve HR services to employees.
Reduce HR and administrative system cost.
Multinational Strategy and IHRM
IHRM orientation: company’s basic tactics and philosophy for coordinating IHRM activities for managerial and technical workers
IHRM Orientation and IHRM Practices for Managers and Technical Workers
Staffing Policies
Ethnocentric IHRM
All aspects of HRM for managers and technical workers tend to follow the parent organization’s home-country HRM practices.
Benefits
Managers are more familiar with the organization’s policies and procedures as key decisions centralized.
Little need to recruit qualified host country nationals for higher management.
Greater loyalty of home country nationals.
Managers are more familiar with the organization and what it offers.
Allows the organization to gain a high level of control and over the subsidiary.
The organization can incorporate their corporate culture into the new subsidiary.
Costs
May limit career development for host country nationals.
Host country nationals may never identify with the home company.
Expatriate managers are often poorly trained for international assignments and make mistakes.
Expatriates may have limited career development.
Regiocentric and Polycentric IHRM
Regiocentric IHRM: region-wide HRM policies are adopted
Polycentric IHRM: firm treats each country-level organization separately for HRM purposes
Benefits
Reduces costs for training of expatriate managers from headquarters.
No investment in language training.
Fewer problems with adjustments to local cultures.
Less expensive.
Costs
Coordination problems with headquarters
Limited career-path opportunities for host country and regional managers
Limited international experience for home country managers
Theories of Work Motivation In The Multinational Context
Maslow’s Hierarchy of Needs Theory
Alderfer’s ERG Theory
Motivator-Hygiene Theory
Achievement-motivation Theory
Needs and the National Context:
Needs Theories of Motivation
People from different nations do not give the same priorities to the needs that might be satisfied at work
Even with similar needs, they may not give the same level of importance of satisfying these needs
Applying Need Theories in Multinational Settings
Identify the basic functions of work in the national or local culture
Identify the needs considered most important by workers in the national or local culture
Sources of need fulfillment may differ for the same needs
Understand limitations of available jobs to satisfy needs