Chap 19: Global Human Resource Management

Human resource management (HRM) refers to the activities an organization carries out to use its human resources effectively.
An expatriate manager is a citizen of one country who is working abroad in one of the firm’s subsidiaries.
Staffing policy is concerned with the selection of employees for particular jobs.
Types of staffing policies: Research has identified three types of staffing policies in international businesses
+ The Ethnocentric Approach: An ethnocentric staffing policy is one in which all key management positions are filled by parent-
country nationals.
* Firms pursue an ethnocentric staffing policy for three reasons:
First, the firm may believe the host country lacks qualified individuals to fill senior management positions.
Second, the firm may see an ethnocentric staffing policy as the best way to maintain a unified corporate culture.
Third, if the firm is trying to create value by transferring core competencies to a foreign operation, as firms pursuing an international
strategy are, it may believe that the best way to do this is to transfer parent-country nationals who have knowledge of that
competency to the foreign operation.
* Despite the rationale for pursuing an ethnocentric staffing policy, the policy is now on the wane in most international businesses for
two reasons:
First, an ethnocentric staffing policy limits advancement opportunities for host-country nationals.
Second, an ethnocentric policy can lead to cultural myopia—the firm’s failure to understand host-country cultural differences that
require different approaches to marketing and management.
+ The Polycentric Approach: A polycentric staffing policy requires host-country nationals to be recruited to manage subsidiaries,
while parent-country nationals occupy key positions at corporate headquarters.
+ The Geocentric Approach: A geocentric staffing policy seeks the best people for key jobs throughout the organization, regardless of
nationality
Expatriate managers: Two of the three staffing policies—the ethnocentric and the geocentric— rely on extensive use of expatriate
managers.
+ Expatriates are citizens of one country who are working in another country.
+ Inpatriates is used to identify a subset of expatriates who are citizens of a foreign country working in the home country of their
multinational employer.
A prominent issue in the international staffing literature is expatriate failure—the premature return of an expatriate manager to his
or her home country.
Expatriate failure represents a failure of the firm’s selection policies to identify individuals who will not thrive abroad.
Expatriate Selection: One way to reduce expatriate failure rates is by improving selection procedures to screen out inappropriate
candidates.
1. Self-orientation. The attributes of this dimension strengthen the expatriate’s self-esteem, self-confidence, and mental well-being.
Expatriates with high self-esteem, self-confidence, and mental well-being were more likely to succeed in foreign postings.
2. Others-orientation. The attributes of this dimension enhance the expatriate’s ability to interact effectively with host-country
nationals.
3. Perceptual ability. This is the ability to understand why people of other countries behave the way they do—that is, the ability to
empathize.
4. Cultural toughness. This dimension refers to the relationship between the country of assignment and how well an expatriate
adjusts to a particular posting.
Training for expatriate managers: Two most common reasons for expatriate failure were the inability of a manager’s spouse to
adjust to a foreign environment and the manager’s own inability to adjust to a foreign environment. Cultural training, language
training, and practical training all seem to reduce expatriate failure.
+ Cultural Training seeks to foster an appreciation for the host country’s culture.
+ Language Training English is the language of world business; it is quite possible to conduct business all over the world using only
English
+ Practical training is aimed at helping the expatriate manager and family ease themselves into day-to-day life in the host country.
MANAGEMENT DEVELOPMENT AND STRATEGY
Management development programs are designed to increase the overall skill levels of managers through a mix of ongoing
management education and rotations of managers through a number of jobs within the firm to give them varied experiences. This is
particularly true in firms pursuing a transnational strategy, as increasing numbers are.
Management development programs help build a unifying corporate culture by socializing new managers into the norms and value
systems of the firm.
1.Performance appraisal systems are used to evaluate the performance of managers against some criteria that the firm judges to be
important for the implementation of strategy and the attainment of competitive advantage globally.
2.Compensation:
+ National differences in compensation: National differences in compensation raise a perplexing question for an international
business.
+ Expatriate pay: The most common approach to expatriate pay is the balance sheet approach. The components of the typical
expatriate compensation package are a base salary, a foreign service premium, allowances of various types, tax differentials, and
benefits.
Building a Diverse Global Workforce: A diverse workforce is one that has a significant mix of both genders and in which cultural and
ethnic minorities are well represented. There are a number of reasons for thinking that a diverse workforce will improve
performance:
First, diverse talents bring insights into the needs of a diverse customer base that TEST PREP Use SmartBook to help retain what you
have learned.
Second, an enterprise with a homogenous employee base is underutilizing the talent to be found among women and minorities.
Third, when the customer set is diverse, those customers may appreciate interacting with an enterprise whose employees look like
them, and therefore, have a better understanding of their needs, tastes, and preference.
Fourth, a diverse workforce may improve the brand image of an enterprise, setting up a virtuous circle where it does better among its
customer set and is more able to attract top talent from among women and minorities.
Fifth, there is evidence that diversity increases employee satisfaction, which results in higher productivity, so long as the workforce is
diverse enough.
International Labor Relations: The HRM function of an international business is typically responsible for international labor relations.
From a strategic perspective, the key issue in international labor relations is the degree to which organized labor can limit the choices
of an international business.
THE CONCERNS OF ORGANIZED LABOR
- A principal concern of domestic unions about multinational firms is that the company can counter its bargaining power with the
power to move production to another country.
- Another concern of organized labor is that an international business will keep highly skilled tasks in its home country and farm out
only low-skilled tasks to foreign plants.
- A final union concern arises when an international business attempts to import employment practices and contractual agreements
from its home country.
THE STRATEGY OF ORGANIZED LABOR
Organized labor has responded to the increased bargaining power of multinational corporations by taking three actions: (1) trying to
establish international labor organizations
(2) lobbying for national legislation to restrict multinationals
(3) trying to achieve international regulations on multinationals through such organizations as the United Nations.
APPROACHES TO LABOR RELATIONS
International businesses differ markedly in their approaches to international labor relations. The main difference is the degree to
which labor relations activities are centralized or decentralized.