Chapter 4

Staffing International Operations for Sustained Global Growth

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Agenda
Chapter 3 Discussion Questions Lecture: Chapter 4 Case True & False Assignment #1

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Discussion Questions
1. Describe the formation process of cross-border mergers, acquisitions and international joint ventures. What are the major differences? 2. Describe the development phases of an M&A and the respective HR implications. 3. Outline the development phases of an IJV and the respective HR implications.
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Chapter Learning Objectives

After reading this chapter, you should be able to: discuss issues relating to the various approaches to staffing foreign operations provide reasons for using international assignments: filling positions, management development and organizational development define the various types of international assignments: short term, extended and longer term, along with nonstandard arrangements: commuter, rotator, contractual and virtual
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Chapter Learning Objectives

describe the role of expatriates and non-expatriates in supporting international business activities outline the possibilities on a return on investment of international assignments define the role of the corporate HR function
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Opening Vignette, page 112 Help!

IHRM plays a leading role in the staffing of international operations by supporting and guiding managers involved in assignments in foreign companies.

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Opening Vignette

Discuss some of the areas and aspects that should have been managed by his companys HRM team.

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Approaches to Staffing
A firm will decided to staff by rather selecting PCNs, HCNs and/or TCNs. ethnocentric polycentric geocentric regiocentric

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Ethnocentric

few foreign subsidiaries have any autonomy and strategic decisions are made at headquarters key positions in domestic and foreign operations are held by headquarters personnel subsidiaries are managed by staff from the home country (PCNs).
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Advantages & Disadvantages of Using PCNs (IHRM Notebook 4-1)

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Cost of Employing Expatriates (IHRM Today 4.3)

the costs of sending this manager on a international assignment are nearly a million dollars, compared to the approximately $300,000 it would cost to employ a U.K. based manager. IHRM 4.1, 4.2 & 4.3

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Polycentrism

subsidiary is treated as a distinct national entity with decisionmaking autonomy subsidiaries are managed by local nationals (HCNs) HCNs are seldom promoted to positions at headquarters PCNs are rarely transferred to foreign subsidiary operations
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Advantages & Disadvantages of Using HCNs (IHRM Notebook 4-1)

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Geocentrism

a global approach to its operations, recognizing that each part (subsidiaries and headquarters) makes a unique contribution world wide integrated business; nationality is ignored in favour of ability.

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Advantages of Geocentrism

develops international executive teams and internal pools of labour overcomes federation drawback supports cooperation and resource sharing across units

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Disadvantages of Geocentrism
host governments may utilize immigration controls in order to force HCN employment companies required to provide extensive documentation increased training and relocation costs

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Disadvantages of Geocentrism
compensation structure with standardized international base pay large numbers of PCNs, TCNs, and HCNs need to be sent abroad requires longer lead time and centralized control of the staffing process
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Regiocentrism
reflects the geographic strategy and structure of the MNE it utilizes a wider pool of managers but in a limited way staff may move outside their countries but only within the particular geographic region regional managers may not be promoted to headquarters positions but enjoy a degree of regional autonomy
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Advantages of Regiocentrism

interaction between executives sensitivity to local conditions (staffed by HCNs) way to gradually move from a purely ethnocentric or polycentric approach to a geocentric approach

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Disadvantages of Regiocentrism
can produce federalism at a regional rather than a country basis improves career prospects at the national levels

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Advantages & Disadvantages of Using PCNs, TCNs & HCNs If you could only pick one staffing option, what would it be and why? Refer to page, 119 IHRM Notebook 4.1

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A Philosophy Towards Staffing

The internal and external contingencies facing an internationalizing MNE influence its staffing practices managerial attitude degree of culture differences local government requirements foreign market maturity of operation organizational needs
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Determinants of Staffing Choices (Figure 4.1)

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Transferring Staff for International Business Activities

HRM implications reasons for using international assignments types of international assignments role of expatriates and non-expatriates role of inpatriates

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Reasons for International Assignments

position filling management development organization development

IHRM Today 4.5

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Types of International Assignments

Short term Extended Long term (traditional expatriate assignment) up to 3months up to 1year 1 to 5 years

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Short-term Assignments

take up to three months usually for troubleshooting, project supervision, or a stopgap measure

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Extended Assignments

up to one year may involve similar activities as that for short term assignments

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Long-term Assignments

traditional expatriate assignment varying from one to five years involving a clearly defined role in the receiving operation

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Differences Between Traditional & Short-term Assignments(IHRM Notebook 4-2)

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Non-standard International Assignments

Commuter Rotational go home every one to two weeks commute for set period followed by in home country specific skills employees hired for 6 to 12 months on specific projects

Contractual

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Non-standard International Assignments

Virtual employee manages international responsibilities from home country base relies on communications technologies such as telephone, email or video conferences frequent visits to the host country
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Virtual Assignments
Advantages overcoming high costs of international assignments fills shortage of mobile staff prepared to accept longer term postings Disadvantages stress resulting from intensive travel commitments role conflict, dual allegiance, and identification issues interpersonal and work relationships
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The Roles of an Expatriate

(Figure 4.2)

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Agent of Direct Control

subsidiary compliance through direct supervision enables strategic objectives for local operations to be achieved

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Agent of Socialization

the transfer of shared values and beliefs; related to the use of corporate culture as an informal control mechanism assist in knowledge sharing and competence transfer, and adoption of common work practices

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Network Builders

develop social capital: fostering interpersonal linkages that can be used for informal control and communication purposes

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Boundary Spanners

collect host country information and act as representatives of their firms in the host country can influence agents bridge internal and external organizational contexts

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Language Nodes

many MNEs operate through language standardization or corporate language, usually English. employees competent in other languages may be the person in which other country representatives preferred to conduct queries from the MNE.

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Transfer of Competence and Knowledge

elements from all roles

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The Role of Non-Expatriates

travel internationally yet do not relocate to another country a large proportion of their role involves constant international visits to foreign markets, subsidiary units, international projects

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Stress Factors

the international component of their work is performed within the context of their normal duties a high level of stress involved for those whose job responsibilities contain a large proportion of international business travel

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Stress Factors

home and family work arrangements travel logistics health concerns host culture issues

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The Role of Inpatriates

international assignments of HCNs or TCNs from a foreign location to the MNE headquarters linking pins between the different organizational units

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The Role of Inpatriates

Expected to share their local contextual knowledge with HQ staff in order to facilitate effective corporate activities at local markets At the same time they are socialized in the HQ corporate culture and learn firm specific routines and behaviours

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The Role of Inpatriates

Desire to create a global core competency and a cultural diversity of strategic perspective in the top management team Desire to provide career opportunities for high potential employees in the host countries The emergence of developing markets that often represent difficult locations for expatriates in terms of quality of life and cultural adjustments
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ROI
International assignments are a very risky and costly way of developing employees Question is, are they worth it? And if so, how can you tell?

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ROI
Traditionally the success of an international assignment has been measured by expatriates failure rates, financial cost associated with the assignment and the performance of the expatriate. How else could you measure the ROI? What could be some other indicators?

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ROI
Firms are increasingly interested in measuring the value of the assignment Analysis of all the IHRM support activities:
Assignment planning Selection Administration Compensation T&D Family Support Performance Management Repatriation Retention Programs
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Expatriate ROI

a calculation in which the financial and non-financial benefits to the MNC are compared to the financial and non-financial costs of the international assignment

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ROI Indicators for Calculating International Assignment (Figure 4-3)

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4-Steps to Calculate Expatriate ROI

identify financial and non-financial costs and benefits. link the costs and benefits to the purpose of the long-term assignment. identify the appropriate antecedents from a systems perspective. conduct the calculation at an appropriate time within the context of the assignments purpose.

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IHRM Today 4.7

1. What could IHRM include to help repatriation be more successful?

IHRM Chapter 4

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Various Roles of Corporate HR (Table4-1)

IHRM Chapter 4

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Question
As a newly appointed Project Manager of a research team, you consider that you will be able to manage the project virtually from your office in London, even though the other six members are located in Munich. This will solve your personal dilemma as your family does not want to be relocated. The project has a six-month deadline. What factors should you need to consider in order to make this virtual assignment effective?

IHRM Chapter 4

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Case: RBC Dexia Investor Services

Questions PART A 1. When two international companies like RBC and Dexia partner up in a joint venture many positions are double occupied. From a HR perspective how would you approach this problem? What are your options to solve this problem? 2. What are some of the other key HR challenges in an international partnership such as Canadas RBC and Belgium/Luxembourg Dexia?
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Case: RBC Dexia Investor Services

Questions PART A 3. What are your options to fill the 300 additionally required jobs in Luxembourg? 4. What kind of impression could the sudden and justification lacking announcement of changes at the top management level have on employees?

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True & False

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Assignment #1
Open book Make sure to put your name on the assignment Hand in before you leave Marked out of 10 and will be handed back next week

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1. Define cross border mergers & acquisitions and international joint ventures. What role does IHRM play? (5 marks) 2. List & briefly explain the four non-standard types of international assignments. Describe the advantages and disadvantages of the virtual international assignment. (5 marks)

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