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International HRM Challenge

2004 by Prentice Hall Terrie Nolinske, Ph.D.

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Challenges

What HRM strategies are appropriate at different stages of internationalization? How is the best employee mix (hostcountry and expatriate) determined? Why do international assignments fail? How are returning employees reintegrated into the firm?
2004 by Prentice Hall Terrie Nolinske, Ph.D. 17 - 2

Expatriate:
A citizen of one country living and working in another country

2004 by Prentice Hall Terrie Nolinske, Ph.D.

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Stages of a Global Organization

Domestic International Multinational Global or Trans-national

2004 by Prentice Hall Terrie Nolinske, Ph.D.

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Managing an International Subsidiary

Ethnocentric Approach Top management and key positions filled by people from home country
Polycentric Approach International subsidiaries managed/staffed by personnel from host country Geocentric Approach Nationality deliberately downplayed Firm searches worldwide or regionally to hire best people to fill key positions
2004 by Prentice Hall Terrie Nolinske, Ph.D. 17 - 5

Advantages of Using Local Employees to Staff International Subsidiaries

Lower labor costs Demonstrates trust in local citizens

Increases acceptance of firm by local

community Firm recognized as part of local economy Represents local opinions in decisionmaking
2004 by Prentice Hall Terrie Nolinske, Ph.D. 17 - 6

Advantages of Using Expatriates to Staff International Subsidiaries Cultural similarity with parent company ensures transfer of business practices
Closer control /coordination of international subsidiaries Employees get multinational orientation Creates pool of internationally experienced executives Local talent may not yet add value
2004 by Prentice Hall Terrie Nolinske, Ph.D. 17 - 7

Disadvantages of Using Local Employees to Staff International Subsidiaries Difficult to balance local demands/global priorities

Leads to postponement of difficult local decisions (such as layoffs)

Difficulty recruiting qualified personnel

Reduces amount of control by headquarters

2004 by Prentice Hall Terrie Nolinske, Ph.D.

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Disadvantages of Using Expatriates to Staff International Subsidiaries

Creates problems of adaptability to foreign
environment and culture Increases foreignness of subsidiary

Involve high transfer, salary and added costs

May result in personal and family problems May lower moral and motivation of local management Subject to local government restrictions
2004 by Prentice Hall Terrie Nolinske, Ph.D. 17 - 9

Why International Assignments Fail

Career blockage Culture shock Lack of pre-departure cross-cultural training Overemphasis on technical qualifications Getting rid of a troublesome employee Family problems
2004 by Prentice Hall Terrie Nolinske, Ph.D. 17 - 10

Upon Return

Lack of Respect for Acquired Skills Loss of Status Poor Planning for Return Position Reverse Culture Shock
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2004 by Prentice Hall Terrie Nolinske, Ph.D.

Selection of Employees for International Assignments

Emphasize cultural sensitivity as a selection criteria Establish a selection board of expatriates Require previous international experience Explore possibility of hiring foreign-born employees to serve as expatriates at future date Screen candidates spouses and families
2004 by Prentice Hall Terrie Nolinske, Ph.D. 17 - 12

Approach to Cross-Cultural Training

Length of Stay: 1 - 3 years Training 1 - 2 months; High level
Impression Approach Assessment center Field experiences Simulations Sensitivity training Extensive language training

2004 by Prentice Hall Terrie Nolinske, Ph.D.

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Approach to Cross-Cultural Training

Length of stay: 2 - 12 months 1 - 4 weeks of training; Moderate level
Affective Approach Language training

Role playing
Critical incidents Cases Stress-reduction training Moderate language training
2004 by Prentice Hall Terrie Nolinske, Ph.D. 17 - 14

Approach to Cross-Cultural Training

Length of stay: 1 month or less Less than a weeks of training; Low level
Informative-Giving Approach Area briefings Cultural briefings Films/books

Use of interpreters
Survival-level language training
2004 by Prentice Hall Terrie Nolinske, Ph.D. 17 - 15

Living Costs Around the World

Cost of Living Index 2001 (3 person US Family at $100,000 /year)

Seoul 147.0 Moscow 113.4 New York 100.0 Mexico City 77.6 Rio de Janeiro 64.9 Bombay 55.5 Toronto 51.3
2004 by Prentice Hall Terrie Nolinske, Ph.D. 17 - 16

Compensation
Provide expatriate with disposable income equivalent to what s/he would get at home Provide explicit add-on incentive for accepting international assignments Avoid having expatriates fill same jobs held by locals or lower-ranking jobs
2004 by Prentice Hall Terrie Nolinske, Ph.D. 17 - 17

Dimensions to Culture
Power distance Individualism Uncertainty avoidance Masculinity/femininity Long-term/short-term orientation
2004 by Prentice Hall Terrie Nolinske, Ph.D. 17 - 18

EEO in the International Context

U.S. firms cannot base employment decisions on employee race, sex, and age, but firms are not required to violate a host nation law
Foreign national employees of U.S. firms in their own country or in another foreign country are not covered by U.S. employment law Immigration Control and Reform Act of 1986: people who are not U.S. citizen, but who are living and have legal work status in the U.S., may not be discriminated against
2004 by Prentice Hall Terrie Nolinske, Ph.D. 17 - 19

 Case
You work for a global pharmaceutical company of 75,000 employees. Four of you have been assigned to each of the following four countries for one year: India, Australia, Zimbabwe and Peru. You are to leave in six months. How do you prepare for your year away? What challenges do you expect?
2004 by Prentice Hall Terrie Nolinske, Ph.D. 17 - 20