Chapter 17

International HRM Challenge

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

17-1

Chapter 17 Objectives

Specify the HRM strategies that are most appropriate for firms at different stages of internationalization. Identify the best mix of host-country and expatriate employees given the conditions facing the firm. Explain why international assignments often fail and the steps a firm can take to ensure success in this area.
Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 17-2

Chapter 17 Objectives

Reintegrate returning employees into the firm after they complete an international assignment. Develop HRM policies and procedures that match the needs and values of different cultures. Consider ethical implications of HRM policies and procedures on a global basis.
Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 17-3

Stages of International Involvement

Expatriatecitizen of one country and lives

and works in another country

Multinational corporation (MNC) Transnational corporation

Firm with assembly and production facilities in several regions of the world Firm with highly decentralized operations in many countries Has little allegiance to its country of origin and weak ties to any country
Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 17-4

Stages of International Involvement

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

17-5

Stages of International Involvement

Outsourcing

Used extensively by firms in stages 3 to 5 Challenges include

Online security Safety issues Client complaints

Falling Barriers

Trade, production, services, and finances barriers largely disappeared

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

17-6

The Mix of Host-Country and Expatriate Employees

Wholly owned subsidiary and joint ventures

Must decide who will manage overseas unit Ethnocentric approach Polycentric approach Geocentric approach

Three approaches

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

17-7

The Mix of Host-Country and Expatriate Employees

Reliance on expatriates increases when:

Sufficient local talent is not available Part of firms overall business strategy is to create a corporate-wide global vision International units and domestic operations are highly interdependent The political situation is unstable Are significant cultural differences between the host and home countries

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

17-8

Challenges of Expatriate Assignments

2040% failure rate for U.S. expatriates 34 times higher than Europeans or Asians

Many reasons assignments end in failure

Career blockage Culture shock Lack of pre-departure cross-culture training Overemphasis on technical qualifications Getting rid of a troublesome employee Family problems
Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 17-9

Challenges of Expatriate Assignments

Difficulties on Return
Lack of respect of acquired skills Loss of status Poor planning for return position Reverse culture shock

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

17-10

Using HRM to Effectively Manage Expatriates

Selection

Emphasize cultural sensitivity as a selection criterion Establish a selection board of expatriates Require previous international experience Consider hiring foreign-born employees who can serve as future expatriates Screen candidates spouses and families

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

17-11

Training

912 months before assignment At least some training should go to the expatriates family Three approaches to training:

Information-giving approach Affective approach Impression approach

Local managers need to be prepared to train incoming expatriates

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 17-12

Career Development

Position the international assignment as a step toward advancement within the firm Provide support for expatriates Provide career support for spouse

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

17-13

Compensation

Provide a disposable income equivalent to what the expatriate would receive at home Provide an explicit add-on incentive for accepting an international posting Dont put expatriates in the same jobs held by locals or lower-ranking jobs Calculating compensation for expatriates is very difficult Fluctuating exchange rates Cost of living varies tremendously
Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 17-14

Using HRM to Effectively Manage Expatriates

Role of HR Department Women and International Assignments

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

17-15

Developing HRM Policies in a Global Context

Western-style management likely to clash with foreign norms and values Must mold practices to culture Hofstedes 5 Dimensions of Culture
Power distance Individualism Uncertainty avoidance Masculinity/femininity Long-term/short-term orientation

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

17-16

EEO in the International Context

EEO prohibition of discrimination based on age, sex, race, etc. apply to international assignments too Foreign national employees of U.S. companies working outside the US are not covered by U.S. employment law Immigration and Control Act (1986) Non-U.S. citizens living and working in the U.S. May not be discriminated against
Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 17-17

Developing HRM Policies: Caveats

National culture may be an elusive concept Culture changes over time Companies sometimes blame international personnel problems on culture without study Virtually no data on the success/failure of HRM practices as a function of culture Different cultures often have very different notions of right and wrong The business laws of other countries often force companies to change their practices

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

17-18

Human Resource Management and Exporting Firms

Key impediments to exporting:

Lack of knowledge about international markets, business practices, and competition Lack of management commitment to generating international sales

Impediments can be attributed to lack of utilization of human resources

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 17-19

Other International HR Considerations

Ethics and Social Responsibility

Many ethical dilemmas face expatriates Ethical and legal are not the same Foreign Corrupt Practices Act (1977)

Political Risk
Government pressures can impact operations negatively. Expatriates often get caught in the middle
Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 17-20

Summary and Conclusions

Five stages of international involvement Three approaches to managing foreign operations Ethnocentric, polycentric and geocentric Emphasize cultural sensitivity when selecting people for international assignments Position international assignments as step towards advancement in the firm Dont transfer home HRM practices abroad Reinforce export activities with HR practices
Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 17-21

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

17-22