International Human Resources

Management
Chapter 17
Why IHRM?
Should we staff the local offices abroad with
local or Bangladeshi managers?

How should we appraise or pay local

employees?

How should we identify and get right talent and

skills?

How should we deal with the unions in our

offices abroad?
Factors Affecting IHRM
Cultural Factors
Countries differ widely in their cultures
Ethnocentrism: viewing own culture as normal
and other cultures as bad, wrong, peculiar
Monochronic: Views time as something which
should be planned beforehand
Polychronic: Views time as something which
should not be planned beforehand
Power distance: the extent to which less
powerful members of institution accept and
expect an unequal distribution of power
Factors Affecting IHRM
Economic System
Different economic systems also translate into differences
in human resources management policies

Some countries in the Euro Zone tend to put more

restrictions on the number of hours an employee can
legally work (e.g. Portuguese workers average about 1980
hours of work annually, while German workers average
1,648 hours

Differences in labor costs are also significant. Hourly

compensation for production workers range from $2.75 in
Mexico to $6.43 in Taiwan, $23.82 in the U.S,, $27.10 in the
UK and $34.21 in Germany
Factors Affecting IHRM
Legal, Political and Labor Relations
Factors
It is very important to understand the laws prior
to entering the foreign market
Think for a moment about the impact of local laws
on Walmart while operating in Germany
Firing people in the UK could be very expensive as
compared to U.S.
Some courtiers (e.g. Germany) are concerned with
codetermination which means that employees
have the legal right to a voice in setting company
policies
 Staffing in Global
Organization
Local- they are citizens of the countries in which
they are working
Expatriates (expats)- They are noncitizens of the
countries in which they are working (e.g. a
Bangladeshi worker working in the U.S.)
Home-country nationals- they are the citizens of
the country in which the multinational company
has its headquarters
Third country nationals- They are the citizens of
a country other than the parent or the host
country (e.g. a Bangladeshi executive working in
Cardiff branch of a U.S. multinational bank
Using Locals
Many people are reluctant to work in a foreign
country

The cost of using expropriates is far greater

than the cost of using local workers

Generally expatriates are at the foreign country

for only a few years and may overemphasize
short-term results
Using Expats
Employers cant find local candidates with the
required skills and knowledge

Control is another reason for using expatriates.

Companies might lose the control if they rely
on the locals
Management Values and International Staffing Policy

Ethnocentric Practices
The notion that home-country attitudes, management style,
knowledge, evaluation criteria, and managers are superior to
anything the host country has to offer.
Polycentric Practices
A conscious belief that only the host-country managers can
ever really understand the culture and behavior of the host-
country market. Therefore, the foreign subsidiary should be
managed by local people
Geocentric Practices
The belief that the firms whole management staff must be
hired 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.
Sony appointed as CEO someone from Wales who would run
the firms U.S. operations
Why Expatriate Assignments
Fail
Personality
Personal intentions
Family pressures
Inability of the spouse to adjust
Inability to cope with larger overseas
responsibility.
Lack of cultural skills
Helping Expatriate Assignment
Succeed

Careful adaptability screening

Providing realistic previews of what to
expect
Improved orientation
Cultural and language training
Improved benefits packages
Selecting Expatriate
Managers
Adaptability screening
Assessing the expats (and spouses)
probable success in handling the foreign
transfer.
Overseas Assignment Inventory
A test that identifies the characteristics and
attitudes international assignment candidates
should have.
I. Job Knowledge III. Flexibility/Adaptability V. Family Situation
and Motivation Resourcefulness Adaptability of spouse
Managerial ability Ability to deal with and family
Organizational ability stress Spouses positive
Imagination opinion
Flexibility
Creativity Willingness of spouse
Emotional stability to
Administrative skills Willingness to change live abroad
Alertness
Tolerance for ambiguity Stable marriage
Responsibility Five Factors
Adaptability
Industriousness
Initiative and energy
Independence Important in
High motivation Dependability International
Frankness Political sensitivity
Positive self-image
Assignee
Belief in mission and
job
IV. Extracultural Openness Success,
Variety of outside interests
Perseverance and Their
II. Relational Skills Interest in foreign cultures
Respect Openness Components
Courtesy and fact Knowledge of local
Display of respect language[s]
Kindness Outgoingness and
Empathy extroversion
Non-judgmentalness Overseas experience
Integrity
Confidence
Selecting Expatriate
Managers
Realistic previews
The problems to expect in the new job as
well as about the cultural benefits and
unconventional behavior of the country.
Orienting and Training for
International Assignment

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.
Appraising Expatriate
Managers
Challenges in appraising overseas managers
Determining who should appraise the manager
Deciding on which factors to base the appraisal

Improving the expatriate appraisal process

Weigh the evaluation more toward the on-site
managers appraisal than toward the home-site
managers
If the home-office manager does the actual written
appraisal, use a former expatriate from the same
overseas location for advice
Stipulate the assignments difficulty level, and adapt
the performance criteria to the situation
Compensating Expatriates
The Balance Sheet Approach
Home-country groups of expensesincome
taxes, housing, goods and services, and
discretionary expensesare the focus of
attention.
The employer estimates what each of these four
expenses is in the expatriates 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.
 The Balance Sheet Approach
(Assumes Base Salary of $80,000)
Incentives
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.
Foreign service premiums
Financial payments over and above regular
base pay, and typically range between 10%
and 30% of base pay.
Thank you!

Finally, we are done with MGT 351.

Thank you for tolerating me throughout the semester.

I am so sorry about the unpleasant events.

I wish you success in all your future endeavors.

Good luck with the final exam!